Standard & Poor’s stripped the United Kingdom of its AAA credit rating in the wake of its historic vote to leave the European Union.
S&P announced the decision to downgrade the U.K.’s credit rating to AA Monday. The ratings agency said uncertainty surrounding the U.K.’s future outside the EU was the main reason for the downgrade.
“This outcome is a seminal event, and will lead to a less predictable, stable, and effective policy framework in the UK,” said S&P. (RELATED: George Soros Warns EU Collapse ‘Practically Irreversible’ After Brexit Vote)
The agency went onto to cite the large majorities that voted to remain in the EU in Northern Ireland and Scotland as creating “wider constitutional issues for the country as a whole.” S&P rated the U.K.’s credit outlook as “negative.”
“The negative outlook reflects the risk to economic prospects, fiscal and external performance, and the role of sterling as a reserve currency, as well as risks to the constitutional and economic integrity of the U.K. if there is another referendum on Scottish independence,” S&P said in a statement.
Currency markets were rocked in the aftermath of the Brexit vote Friday with the pound falling sharply and close to two trillion dollars wiped off equity markets since the decision.
Britain’s two major political parties are in the midst of major upheaval, with Prime Minister David Cameron triggering a leadership contest in the Conservative Party and Labour members of parliament set to vote on a motion of no confidence in their leader Jeremy Corbyn.
Brexit is a major blow to the EU project, with nationalist parties across Europe now demanding referendums of their own.
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