Brussels, 28/06/2016 (Agence Europe) - On Monday 27 June, the Standard and Poor (S&P) and Fitch notation agencies downgraded the United Kingdom.
S&P explained that it had made this decision because of the uncertainty generated by the referendum in favour of Brexit. S&P is also anticipating a "less predictable, less stable and less efficient political context" over the next few months. Fitch is forecasting a "steep slowdown" in British growth and downgraded British debt from AA+ to AA, with a negative perspective.
Stirling continued to fall, reaching new lows against the euro and dollar on Monday. The British stock exchange lost 1.21% in the first half of the day's trading. British bank shares plunged (-17% for Barclays). A survey among businesses also demonstrated that a fifth of British CEOs were looking at the prospect of relocating some of their business activities.
This uncertainty on the financial markets is one of the reasons that prompted Commission President, Jean-Claude Juncker to call for the pace in proceedings to be speeded up. Addressing the European Parliament during a debate on Tuesday morning he stated that "We cannot accept a protracted period of uncertainty. I am not a slave to the financial markets but I am looking what they're doing". The Commissioner for Economic and Financial Affairs, Pierre Moscovici, was keen to provide reassurances about the potential impact from the result of the referendum on growth in the eurozone. On Tuesday he told BFM TV that "We are not facing a crash like in 2008 but rather, a correction, with the markets having largely anticipated a vote 'to remain'". He also said that "It is possible that there will be a certain amount of volatility but the recovery is not under threat and there will not be any recession". He added that for the United Kingdom, the situation was more complex, as borne out, for example, by the fall in the value of sterling.
On top of this bad news, the Chancellor of the Exchequer, George Osborne, acknowledged that further cuts in public spending and tax rises would be necessary. Speaking on BBC 4 he said "We are absolutely going to have to provide fiscal security to people, we are going to have to show the country and the world that the government can live within its means". (Original version in French by Élodie Lamer)