Moody’s outlook on United Kingdom sovereign rating changed to negative from stable — BREXIT

It added: “We believe that universities and Transport for London (TfL) also face material credit risks due to the likely loss of European Union funding, potential rising costs and weaker demand due to immigration curbs and slower economic growth”.

Other credit ratings companies such as Standard & Poor’s said prior to the referendum vote on Thursday that Britain would likely face a downgrade if voters opted to leave the EU.

While retaining the country s overall rating at a high “Aa1”, Moody s said after the Brexit vote that it expects the country s growth to slow, economic policy-making to suffer and the country s finances to weaken while it struggles through the details of the breakup.

The move follows the count in Britain’s European Union referendum, which saw voters choose to quit the bloc by 52 percent to 48 percent as the government’s pro-EU campaign was defeated by more than 1 million ballots. Moody’s central assumption is that the two sides will eventually come to an agreement that preserves most, but not all, of their current trading arrangements.

A negative effect created by lower growth economically will outweigh fiscal savings from the United Kingdom not having to contribute any longer to the budget of the EU.

The third driver for the outlook change to negative from stable is the negative effect on the UK’s public finances arising from lower economic growth.

But now Osborne’s own political future is uncertain after his ally Cameron promised to step down in October. Those policies – in the areas of trade, regulations, immigration, tax – will become clearer over the coming 1-2 years.

Some have suggested financial markets have been engulphed by a “Black Friday” as traders around the world responded to the consequences of Britain’s exit from the EU. All opinions expressed are those of Fitch Ratings.

A failure to reduce the deficit or the emergence of “heightened pressures on the exchange rate” could also force down the UK’s credit rating.