Rolling coverage of the latest economic and financial news
- Latest: S&P Global says no-deal could hurt UK credit rating
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- Full story: Johnson and EU vow to go ‘extra mile’ to thrash out Brexit deal
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In New York, Wall Street has opened higher thanks to vaccine optimism, stimulus hopes, and some relief that the Brexit talks didn’t blow up yesterday.
Stocks are close to last week’s record highs, after the coronavirus vaccine developed by Pfizer and BioNTech got approval from the US Food and Drug Administration on Saturday.
Related: FDA approves Pfizer/BioNTech coronavirus vaccine for emergency use in US
Credit ratings firm S&P Global has warned the UK’s credit rating could be hit if its economy suffers the economic shock of a no-deal Brexit.
In a research note today, S&P predicted that Britain’s economic recovery would suffer if companies lost access to European markets for a ‘prolonged period’. This could undermining the country’s attractiveness to investors, and put the credit rating under ‘downward pressure’.
Our sovereign ratings on the UK assume the U.K. and the EU will reach a basic agreement at the end of the transition period. A no-deal scenario would have important implications for the U.K. economy, the country’s ability to attract inflows of capital and labour over time, and its public and external finances, in our opinion.
Our sovereign ratings on the U.K. could come under downward pressure if the economic recovery is significantly weaker than we anticipate, making fiscal consolidation more challenging. This could happen, for instance, if merchandise and services exports from the U.K. lose access to key European markets for a prolonged period.
Typically over $100 billion (about 4% of GDP), the U.K.’s current account deficit is the second largest in the world, in absolute terms, after that of the US.
Any reduction in the appetite of non-residents to finance this deficit, or to roll over the U.K. private sector’s elevated stock of short-term external debt, would also weigh on the U.K.’s growth prospects.
Related: Britain credit rating downgraded as markets suffer more Brexit losses – as it happened