There have been a couple of notable signals about the upcoming EU referendum lately. A public opinion poll showed a clear majority lead for Brexit, then a Financial Times poll of more than 100 leading economists concluded that a vote to leave would damage U.K. growth. But while the arguments for and against are still shaping up, everyone appears to be ignoring how the credit-rating agencies would respond to Brexit.
This is surprising. Only recently, credit-rating agency Standard & Poor’s fired a warning shot, saying that the U.K. would be downgraded one notch on leaving, and this could double if relations with Brussels soured. And unlike Standard & Poor’s, the other two main credit-rating agencies, Moody’s and Fitch, have already stripped Britain of its precious AAA rating—the highest possible. If all three downgraded Britain after a Brexit, the road back to AAA status would be even harder.
