Standard & Poor's downgrades UK economy outlook to negative over Brexit fears
Global ratings agency Standard and Poor's (S&P) has downgraded its outlook for the UK economy following the government's decision to hold a referendum on the country's membership in the European Union.
"We believe that the UK government's decision to hold a referendum on EU membership by 2017 indicates that economic policy-making could be at risk of being more exposed to party politics than we had previously anticipated," the agency said in a Friday statement.
"We are therefore revising the outlook to negative from stable," it added.
British Prime Minister David Cameron has vowed to hold an in-out referendum on the UK's membership in the EU by 2017.
Although the referendum was a campaign promise in last month's general elections, Cameron's Conservative party, which won an overall majority in the vote, is divided on the issue of a British exit from the EU (Brexit).
The prime minister supports Britain's continuing membership in the EU, but a number of lawmakers back leaving.
S&P also warned that in addition to the referendum, there were other worrying factors.
"We believe a possible UK departure from the EU also raises questions about the financing of the UK's large twin deficits (the budget deficit and the current account deficit) and its high private short-term external debt," the agency noted.
British industry associations had formerly warned of severe economic outcomes of leaving the EU.
"Business must be crystal clear that (EU) membership is in our national interest," the president of the Confederation of British Industry (CBI), Mike Rake, said on May 20.
During Cameron’s first term in office, the government launched austerity measures in 2010 in a bid to tackle the country’s mounting debt and sluggish growth, but the policies have sparked public protests in recent years.
MSM/AS/MHB
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