UK's credit rating outlook downgraded to 'negative'

Credit: PA

The UK's credit rating outlook was downgraded from "stable" to "negative" on Saturday in the wake of the country's vote to leave the European Union.

Ratings agency Moody's said victory for Brexit would "herald a prolonged period of uncertainty" for the UK, with "negative implications for the country's medium-term growth outlook".

In the intervening years during which Britain will renegotiate its trade relations with the EU, "heightened uncertainty, diminished confidence and lower spending and investment" would cause lower growth, Moody's predicted.

In a statement, Moody's also forecasted that the consequences of lower economic growth would "outweigh" savings accrued from not having to contribute to the EU budget.

Mark Carney warned the UK would experience economic volatility Credit: PA

Britain's "negative" rating could be downgraded in the event that negotiations with the EU are protracted, or if the UK struggles to retain its access to the Single Market.

A failure to reduce the deficit or the emergence of "heightened pressures on the exchange rate" could also force down the UK's credit rating.

"The outlook could be returned to stable if Moody's concluded that the UK government is likely to be able to negotiate a trade arrangement with the EU that preserves core elements of the UK's current access to the Single Market", Moody's said.