Moody's comments in its latest Brexit update
- No-deal Brexit would damage UK's economic and fiscal strength
- That would be a credit negative for a range of debt issuers
- It would be a foregone conclusion that UK's credit profile would be irreparably weakend in the event of a no-deal Brexit
- If a no-deal Brexit happens, immediate impact likely to be sharp fall in the pound, temporarily higher inflation
- But still believes that UK and EU will eventually reach a deal to preserve many of the current trading arrangement, particularly around trading in goods
I think the immediate effects of a no-deal outcome are very much clear by now. As with the Brexit vote, a no-deal outcome will very much see the pound fall rather sharply from current levels. But all other scenarios are basically positive for the quid in my view.
If anything, the only takeaway here is that there is a bit of a growing belief that there's a chance we won't see an agreement being reached between the UK and the EU.