Cameron insists UK economy robust as credit rating cut
London — Prime Minister David Cameron insisted Monday that Britain’s shock vote to leave the European Union won’t send the economy into a tailspin, even as the country was stripped of its top credit rating and stock markets and the pound continued a downward spiral.
Calling the vote a “seminal event” that “will lead to a less predictable, stable and effective policy framework in the U.K,” Standard & Poor’s knocked the U.K.’s sovereign rating by two notches, from AAA to AA. Hours later, Fitch Ratings followed suit, downgrading the country to AA, from AA+.
Both agencies said they were keeping a negative outlook on their ratings, which means they could downgrade the country further. Standard and Poor’s cited risks to the economy and public finances, the pound’s role as an international reserve currency and “risks to the constitutional and economic integrity of the U.K.” as Scotland’s strong vote to remain in the EU could raise the prospect of another referendum on Scottish independence.
Speaking earlier in the day as the House of Commons met for the first time since last week’s referendum, Cameron insisted the British economy was robust and could withstand the shockwaves.
“It is clear that markets are volatile, there are some companies considering their investments and we know this is going to be far from plain sailing,” Cameron told lawmakers. “However, we should take confidence from the fact that Britain is ready to confront what the future holds for us from a position of strength.”
Despite the uncertainty fueling financial instability, leaders in both Britain and the EU signaled there would be no immediate start to negotiations on an EU exit.
German Chancellor Angela Merkel met with her French and Italian counterparts and said “we agree there will be no formal or informal talks” until the British government officially declares its intention to quit by invoking Article 50 of the EU treaty.
The statement appeared to scotch hopes by Conservative lawmaker Boris Johnson and his Vote Leave campaign to hold preliminary talks on the general outlines of a deal before Article 50 triggers a two-year countdown to a British exit.
Earlier, Merkel said she understood that Britain may need “a certain amount of time to analyze things,” but said a “long-term suspension” of the question wouldn’t be in either side’s economic interest.
Cameron announced last week he would resign by the fall after failing to persuade a majority of voters to back continued EU membership, saying his successor should be the one to navigate Britain’s departure from the EU.