Credit ratings agency, Standard & Poor’s has moved to cut Great Britain’s credit rating to ‘AA’ from ‘AAA’ citing what it described as “a deterioration of the UK’s economic performance, including its large financial services sector”.

Another of the big three ratings agencies, Fitch Ratings, downgraded Britain to AA from AA+ while Moody’s Investor Services, lowered cut its credit rating outlook on the country to “negative” following the result of last Thursday’s UK referendum on its membership of the European Union. Voters chose to leave the world’s largest trading bloc by a slim margin.

S&P’s downgrade makes it the last credit ratings agency to strip the UK of its AAA rating and suggests that the country will almost certainly find it more expensive to borrow on the international money markets at some point in the future.

“Over the short term, the ratings downgrade won’t affect Britain’s borrowing costs because, since the Brexit vote, yields on 10-year gilts (bonds) have actually fallen as investors seek safe havens from the global plunge in equities,” said Monica Freeman, chief markets strategist at Monex Financial.

“Over the medium to long-term, however, the country could see it become slightly more expensive to raise money. That said, if the Bank of England has to lower interest rates from their current 0.5% to counter economic headwinds caused by the Brexit, those yields will fall even further,” she explained.

Monex Financial says it doesn’t regard the downgrade as a serious issue for the UK since bond yields are falling all over Europe and the rest of the world as investors grow less inclined to hold riskier assets such as stocks amid a global economic slowdown.
About Monex Financial
Monex Financial is a privately held, fully independent investment and wealth management leader, with retail operations based in Toronto, Canada and corporate trading division headquartered in Tokyo, Japan.

From our offices in Toronto the capital city of the province of Ontario and financial and business capital of Canada, we serve private individuals and families from N. America to Europe and with our corporate trading division strategically located in Tokyo, Japan, we have unrivalled access to Asia’s high yielding emerging markets, access to corporate resources, private equity and global mergers and acquisitions.