S&P puts negative outlook on Britain's top AAA rating over EU referendum

British Prime Minister David Cameron delivers a speech on "the future of the European Union and Britain's role within it", in central London, on Jan 23, 2013. -- PHOTO: AFP
British Prime Minister David Cameron delivers a speech on "the future of the European Union and Britain's role within it", in central London, on Jan 23, 2013. -- PHOTO: AFP

LONDON (AFP) - Standard & Poor's said Friday it switched to negative the outlook on Britain's top AAA credit rating due to the government's decision to hold a referendum on whether to stay in the European Union.

"We believe that the UK government's decision to hold a referendum on EU membership by 2017 indicates that economic policymaking could be at risk of being more exposed to party politics than we had previously anticipated," the credit ratings agency said in a statement.

It recalled it had lowered the US' sovereign rating in 2011, when sharp political disagreements between Democrats and Republicans nearly pushed the country into default.

Legislation paving the way for Britain's referendum on leaving the EU crossed its first hurdle in parliament earlier this week, but Prime Minister David Cameron's Conservative party is deeply divided and holds only a narrow majority in parliament.

The referendum was a campaign promise in last month's election, but Cameron's party is divided on the issue.

The Prime Minister backs Britain's continuing membership in the EU, but dozens of MPs look set to support leaving.

Comments by Cameron this week triggered a row about whether ministers in his government would have to resign if they did not campaign for Britain to remain in Europe.

"A possible UK departure from the EU also raises questions about the financing of the economy's large twin deficits and high short-term external debt," said Standard and Poor's.

"We are therefore revising the outlook to negative from stable and affirming the 'AAA/A-1+' ratings on the UK," it added.