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03 December 2015

Reuters: Moody's says Brexit would hurt UK economy, benefits unclear

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Ratings agency Moody's said that a British exit from the European Union would hurt the country's economy by damaging trade and investment and could put its credit rating at risk of a downgrade.

[..] Moody's, spelling out its thinking about a so-called Brexit in more detail than before, said Britain would face a long period of uncertainty if it had to negotiate a trade deal with its former EU partners following a vote to leave the bloc.

Moody's called into question some of the purported benefits of leaving the EU, saying the financial savings from no longer contributing to its budget would be modest at about 0.6 percent of economic output per year.

Furthermore, Germany's success in exporting goods to China and other emerging markets showed that being in the EU was no hindrance to trade with countries outside it, Moody's said.

"Exit would be negative for trade and investment in the UK, given the close links with the EU as the UK's single most important trading partner and largest source of foreign-direct investment," Kathrin Muehlbronner, a senior vice president at Moody's, said.

"These negative effects outweigh the benefits from exit such as cost savings for government and a reduced regulatory burden for businesses in our view," she said in a statement. [...]

Full article on Reuters

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