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Acrimonious Brexit could hit European Union's credit rating - S&P

Published 10/04/2017, 16:11
Updated 10/04/2017, 16:20
© Reuters. FILE PHOTO: A Union flag flies next to the flag of the European Union in London

LONDON (Reuters) - An acrimonious Brexit, in which Britain declines to honour its existing financial obligations could put pressure on the European Union's 'double A' rating, S&P Global said on Monday.

Having recently triggered the EU exit process, Britain's government is facing a request from the European Commission to honour its existing financial obligations, which reportedly could reach 60 billion euros.

S&P said the claims were unlikely to be legally enforceable however, and that the EU's rating could suffer if the UK didn't stump up the money.

"The European Union (AA-Stable/A-1+) ratings could come under pressure in an adverse scenario," S&P said.

"This is because our ratings on the EU are to a certain extent predicated on our expectation that the UK would honour its share of financial obligations to the EU."

It said a non-payment of obligations would not constitute a default by Britain.

The ratings of a handful of multilateral lenders the UK pays into could also come under pressure, S&P Global said.

© Reuters. FILE PHOTO: A Union flag flies next to the flag of the European Union in London

Multilateral lenders including the European Investment Bank, the Inter-American Development Bank, Council of Europe Development Bank, African Development Bank, and Eurofima could all see their ratings reviewed.

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