World Economy

UK may face 2-notch rating cut if it leaves EU: S&P

Britain's credit rating could be cut by as much as two notches if it leaves the European Union, Standard & Poor's told Reuters on Thursday.

A vote to quit the EU would be likely to result a one-notch downgrade, which could be increased to two notches if relations between London and Brussels deteriorated significantly, the agency's chief sovereign rating officer told Reuters in an interview.

Support among Britons for staying within the bloc has tumbled as an influx of migrants into Europe has pushed many voters towards opting for an exit ahead of a referendum due by the end of 2017.

S&P has rated Britain at AAA since 1978, but changed the outlook to negative in June this year citing the risk of a so-called 'Brexit'.

S&P's Moritz Kraemer told Reuters that Britain would face a one-notch downgrade if it voted to leave, and possibly double that if relations between Britain and Brussels sour or that vote prompted secession by Scotland.

"Should we conclude that departure from the EU is likely over the medium term, we could lower the rating by potentially more than one notch, depending on the circumstances, such as the expected future relations with the EU," Kraemer said.

A poll earlier this month showed support for a British exit at 39 percent, the highest level since 2012, up from 27 percent in June.

Whether Scotland remained part of the United Kingdom after Brexit would also be a factor. The Scottish government has said Brexit could trigger another vote on independence following a referendum north of the border on that issue last year.

"It is one thing to leave the EU, but if the country gets divvied up further, then that is another layer of complication and problems," he said.