Fitch says that Brexit could lead to downgrades for other EU countries – Reuters

By FXStreet Following are the latest observations on ‘Brexit’ made by US ratings agency, Fitch:

• A British exit from the EU could hurt the credit ratings of other EU countries with close trade or financial ties to Britain, including Germany, France, Spain, Ireland and the Netherlands.

• If the “Out” campaign wins the June 23 referendum, it would create widespread uncertainty for the whole European bloc as governments and businesses try to get to grips with the breakaway process. (Although this is not their “Base case” scenario)

The ratings agency has already said it will review Britain’s rating, currently AA+ with a stable outlook, if the “Out” campaign wins June 23’s referendum.

Key quotes

“We would not expect to take any immediate negative rating actions on other EU sovereigns if the UK left.”

“But negative actions would become more likely in the medium term if the economic impact were severe or significant political risks materialised.”

“Brexit would create a precedent for countries leaving the EU,” Fitch said. “If the UK were to thrive outside of the EU, it might encourage other countries to follow suit.”
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Source:: FX Street