Brexit Would Spell The End Of The U.K.'s 'AAA' Rating

S&P Global Ratings' assumption is that at the referendum on June 23 the British electorate will decide that their country should remain a member of the European Union. This expectation is based on the majority of opinion polls and bookmakers' quotes, which appear to suggest a narrow victory in favor of remaining. Should the voters surprise us, however, and a majority back Brexit, the days for the U.K.'s 'AAA' sovereign rating would be numbered. Depending on the circumstances and consequences of a vote to leave, we could lower the rating by more than one notch if we reassessed our view of the U.K.'s institutional strength and ability to formulate policy conducive to sustainable growth (see: "United Kingdom Ratings Affirmed At

...(Editor's Note: This article is based on a speech given at the Association of Corporate Treasurers Annual Meeting in Liverpool on May 19, 2016. For more details on S&P Global Ratings views on Brexit, see www. spratings.com/brexit.) S&P Global Ratings' assumption is that at the referendum on June 23 the British electorate will decide that their country should remain a member of the European Union. This expectation is based on the majority of opinion polls and bookmakers' quotes, which appear to suggest a narrow victory in favor of remaining. Should the voters surprise us, however, and a majority back Brexit, the days for the U.K.'s '###' sovereign rating would be numbered. Depending on the circumstances and consequences of a vote to leave, we could lower the rating by more than one notch if we reassessed our view of the U.K.'s institutional strength and ability to formulate policy conducive to sustainable growth (see: "United Kingdom Ratings Affirmed At '###/A-1+'; Outlook Remains Negative...

Commentary