S&P comments on pound possibly losing reserve currency status

forex live-Britain is in danger of misreading the political landscape in Europe and faces the possible loss of its reserve currency status if it fails to secure full access to the European single market, Standard & Poor's has warned.

The powerful US rating agency said the British government is treading into hazardous waters in negotiations with the EU and is risks serious damage to economy's future growth trajectory, with long-term implications for the debt profile and the country's credit-worthiness.

reserve currency status

S&P  fears that loss of unfettered access to the single market would have incalculable consequences for business, yet the Government so far appears almost insouciant about this.

Ravi Bhatia, the S&P director of sovereign ratings in charge of Britain says:

"There seems to be this view that 'we're a big important economy, the Europeans export a lot to us, so they have got to give us what we want', but is that really true?"

"Individually most of these countries don't export that much to the UK, and were seeing a hardening of attitudes,"

Mr Ravi said Britain has limited scope for a spree on infrastructure projects and is walking a fine line on budget policy. "Before Brexit, the trajectory was planned fiscal consolidation, but we're no longer certain we're going to see that,"

"If they ramp up fiscal spending they'll get a stimulus and that is good in one way as it will help boost growth, but they have to finance that spending; it will raise the deficit, and the debt stock is already high,"

Standard & Poor's stripped Britain of its AAA status immediately after the Brexit vote in June, slashing the rating by two notches to AA, although the move was well-flagged in advance. It described the vote as seminal event that would lead to a "less predictable, stable, and effective policy framework in the UK".

S&P will issue its next verdict at the end of October.

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