Fitch downgrades United Kingdom to 'AA'; outlook negative

Fitch Ratings downgraded the United Kingdom's ratings to 'AA' from 'AA+', with negative outlook.

Among key drivers for the downgrade of the UK and negative outlook it is the belief that  the UK vote to leave the European Union in the referendum on 23 June will have a negative impact on the UK economy, public finances and political continuity.

“Fitch believes that uncertainty following the referendum outcome will induce an abrupt slowdown in short-term GDP growth, as businesses defer investment and consider changes to the legal and regulatory environment”, said Fitch in a statement. “While recognising the uncertainty of the extent of the negative shock, Fitch has revised down its forecast for real GDP growth to 1.6% in 2016 (from 1.9%), 0.9% in 2017 and 0.9% in 2018 (both from 2.0% respectively), leaving the level of real GDP a cumulative 2.3% lower in 2018 than in its prior 'Remain' base case.”