DBRS cuts United Kingdom

DBRS said it downgraded the United Kingdom’s long-term foreign- and local-currency issuer ratings to AA (high) from AAA. The trend on the ratings is changed to stable from negative.

“The downgrade reflects DBRS Morningstar’s view that the coronavirus disease (Covid-19) will materially impact the U.K.’s economy and public sector finances in the context of an already slowing economy and expansionary fiscal policy related to Brexit. While the U.K. is a highly flexible economy, the disruption caused by E.U. exit will slow the pace of recovery relative to other countries and will delay fiscal re-balancing,” the agency said in a press release.

The stable trend reflects that despite the current adverse economic climate and a likely 10% GDP contraction this year, according to the latest European Commission forecasts, the agency believes the U.K. holds a high degree of resilience with the shock-absorbing benefits of the country’s own monetary policy and flexible exchange rate, DBRS said.

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