The world’s top credit ratings agency, Moody’s, has assessed any potential, negative economic impact from Britain leaving the European Union (EU) as “small” – no doubt leaving the ‘Remain’ campaign stunned by the failure of big bankers to oppose Brexit more robustly.
A new report entitled “UK and EU: Brexit Presents Modest and Manageable Credit Challenges for Exposed Issuers” outlines how the economic costs of the UK leaving the EU would barely outweigh the potential benefits – a worthwhile trade-off for British sovereignty, decision-making, and border control as far as ‘Leave’ campaigners are concerned.
The negligible impact, the agency says in the report, may lead to a negative outlook for the UK’s AA1 sovereign rating, however the finance behemoth described the impact as “manageable” and said that both the UK and the EU would work to avoid unnecessary large scale disruption.
The news skewers arguments from the ‘Remain’ campaign who have warned of European backlashes – including tariffs – if Britain left the European Union.
“A UK vote to leave the EU would create heightened uncertainty,”said the report’s co-author Colin Ellis, Moody’s Chief Credit Officer, EMEA, “which would lead to modestly weaker economic growth in the UK over the medium-term”.
But Moody’s also believes the UK and the EU would preserve most of their existing trading relationships, because any substantial new barriers to trade would pose a more significant threat to corporate creditworthiness.
“The impact on the insurance industry would be manageable” said the company’s press release, “unless there is significant disruption to ‘passporting’, which allows companies to provide cross-border services”.
“There would be limited credit implications for banks based in the UK or for foreign banks with sizable subsidiaries” they added, stating: “The impact on structured credit quality would likely be small. Given the relatively modest economic impact from Brexit, Moody’s would not expect to see significant increases in unemployment and policy rates or declines in property prices”.