Ratings agencies reiterate Brexit would hurt UK economy

[LONDON] Two of the world's main credit rating agencies on Monday reiterated their view that the British economy could be damaged if the country votes to leave the European Union in a referendum scheduled for June 23.

Fitch Ratings said "Brexit" would come with a short-term economic cost and "significant" long-term risks, and Moody's Investors Service said it would assign a negative outlook to the country's Aa1 credit rating.

"A decision to leave the EU would be credit negative for the UK economy," said Kathrin Muehlbronner, a senior vice president at Moody's.

Political uncertainty on what would follow a vote for Brexit would hit investment in Britain, the agencies said, clouding the economic and financial outlook.

Prime Minister David Cameron set the referendum for June 23 after clinching an agreement with from the 27 other EU leaders to give Britain what he said was special status within the bloc.

The campaign heated up on Sunday when Boris Johnson, the mayor of London and among the front runners to succeed Cameron as Conservative Party leader, announced that he would support the campaign to leave the EU.

Mr Johnson's announcement helped trigger a sharp fall in sterling on Monday. UK companies rushed to hedge their exposure to the pound, pushing up the cost of protection against sharp price swings to its highest in over four years.

Most economists and market analysts say Brexit would be bad for the British economy and financial assets, principally sterling.

REUTERS