January 14, 2013 10:25 pm

‘Brexit’ would hit UK credit score

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From Prof Costas Milas.

Sir, Wolfgang Münchau (“It does not really matter if Britain leaves the EU”, January 14) seems to ignore the consequences of such a move for Britain’s credit score. A serious problem with a possible “Brexit” is that Britain risks a huge drop in its credit rating score with adverse effects on its cost of borrowing, investment prospects and, eventually, economic growth. Indeed, in deciding credit rating scores, credit rating agencies have historically placed a premium on EU membership. If Britain’s policy makers decide to proceed with a “Brexit”, they will have to spell out in great detail what the economic benefits of such a move will be.

Unless they do so, Britain’s prized triple A credit rating risks going fast, whether or not fiscal figures turn out to be worse than their corresponding targets.

Costas Milas, Management School, University of Liverpool, UK

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