S&P cuts EU credit rating after Brexit

Standard & Poor's cut the European Union's credit score on Thursday (June 30), citing concerns about the unity of the bloc after Britain's decision to leave.
Standard & Poor's cut the European Union's credit score on Thursday (June 30), citing concerns about the unity of the bloc after Britain's decision to leave.PHOTO: BLOOMBERG

BRUSSELS (REUTERS) - Ratings agency Standard & Poor's cut the European Union's credit score on Thursday (June 30), citing concerns about the unity of the bloc after Britain's decision to leave, but a senior EU official said the impact would be minimal.

Standard & Poor's cut its rating to "AA" from "AA+", saying in a statement that it had "reassessed its opinion of cohesion within the EU" and that the bloc may have less budget flexibility after Britain's departure.

Some anti-EU parties across Europe welcomed Britain's vote to leave and have called for their own referendums, particularly in France.

"Revenue forecasting, long-term capital planning, and adjustments to key financial buffers of EU will be subject to greater uncertainty," the ratings agency said in a statement.

Standard & Poor's said its outlook was stable, however.

A senior EU official involved in the bloc's economic policy said the downgrade of a single agency should not affect the EU because investors take an average of all ratings on capital requirements, meaning in practice the EU retains a top-notch credit rating.

The official said Brussels had no indication that other downgrades would follow.

A spokesman for the euro zone's bailout fund, the European Stability Mechanism, declined to comment.