S&P changes UK outlook to "Negative" on EU referendum fears...

HAMISH_MCTAVISH

We believe that the U.K. government's decision to hold a referendum on EU membership by 2017 indicates that economic policymaking could be at risk of being more exposed to party politics than we had previously anticipated, similar to the situation in the U.S. when we lowered that sovereign rating in 2011.

A possible U.K. departure from the EU also raises questions about the financing of the economy's large twin deficits and high short-term external debt.

We are therefore revising the outlook to negative from stable

In our opinion, there are important risks to the U.K.'s longer-term economic prospects should it leave the EU, with implications for external financing and the role of sterling as a reserve currency, although this would also depend on what sort of relationship with Europe and the single market the U.K. could negotiate were it to leave the EU.

The U.K. benefits from its flexible open economy, which we judge to have prospered inside the EU. We believe the U.K.'s EU membership has enabled the economy to attract higher inflows of low-cost
capital and skilled labor than it would have attracted without access to the single market.

It is our view that significant net immigration into the U.K. over the past decade has improved the sovereign's economic and fiscal
performance.

https://www.globalcreditportal.com/ratingsdirect/renderArticle.do?articleId=1403958&SctArtId=321408&from=CM&nsl_code=LIME&sourceObjectId=20008556&sourceRevId=204&fee_ind=N&exp_date=20250611-22:26:04

Landofwood

So tell us what you think Hamish. We can all read the news*.

HAMISH_MCTAVISH

Landofwood wrote: »

So tell us what you think Hamish. We can all read the news.

I think the referendum on EU membership for the UK will do exactly what the referendum on UK membership did for Scotland.

Create bitterness, devision, business uncertainty, and deferred investment, which will result in tens or hundreds of thousands of jobs not being created until the matter is settled.

With regards to the original article, S&P are right in noting there are material risks to leaving and that the UK economy has benefited immensely from membership but that is so self-evident I really shouldn't need to repeat it....:)

michaels

Hamish would there ever be a situation in which other considerations trumped 2% on gdp?

CLAPTON

well one well know economist thinks that UK would do much better if it left the EU and removed all tariff barriers.

The benefits of the current situation are hard to quantity.
Only the amasing arrogant can 'know' what would have happened if we hadn't joined and pursued 'real' open trade with the whole world.

Although some people in northern regions, think that London & SE house prices are an immense benefit, that is not so obvious to people wanting to buy a family home and have a decent standard of housing.

S&P, of course were giving triple A rating to junk bonds right up to the financial crash

by rights, they should be in prison along with many of the bankers, rather than quoted as an economic authority.

Carl31

CLAPTON wrote: »

well one well know economist thinks that UK would do much better if it left the EU and removed all tariff barriers.

.

This is what I don't get. Surely leaving the eu means we can stipulate our own trade restrictions and control imports/exports our way, theoretically we could make it even easier for Europe to trade with us, or replicate the existing arrangement under our own laws, meaning trade remains the same

HAMISH_MCTAVISH

michaels wrote: »

Hamish would there ever be a situation in which other considerations trumped 2% on gdp?

No.

But of course it's also about far more than that, as you well know.

michaels

HAMISH_MCTAVISH wrote: »

No.

But of course it's also about far more than that, as you well know.

And yet 45% of Scots voted against their economic self-interest in the independence referendum.

But part of the problem is that the cheer leaders for whichever side only highlight the issues they feel support their argument which the undecided (like me) just find to be a turn off. It is a nuanced decision, being told constantly that only one answer is 100% right just doesn't help.

CLAPTON

HAMISH_MCTAVISH wrote: »

No.

But of course it's also about far more than that, as you well know.

well, 100% of practicing macro economists disagree with you.

they know, as do all sensible and reasonable people, that GDP is a poor measure of the welfare of the people.

disciples of defunct religions may differ.

kabayiri

There was the same forecasting of doom & gloom before the Scottish indy ref.

In the end, it was business as usual for the vast majority of people.

Let's trust the voters in the referendum eh? You can't argue that we can vote on Scottish independence but not UK independence.

HAMISH_MCTAVISH

kabayiri wrote: »

There was the same forecasting of doom & gloom before the Scottish indy ref.

And rightly so.

In the end, it was business as usual for the vast majority of people.

The indyref caused a bitter and ugly state of division in Scotland that lasts to this day. It'll take years, perhaps decades, to overcome that.

It was also the case that significant investment was deferred and many jobs went uncreated for a couple of years. The unemployed who spent an extra year or two on benefits were not well served by that delay.

Let's trust the voters in the referendum eh? You can't argue that we can vote on Scottish independence but not UK independence.

Well it's a good thing I didn't argue that the Scottish referendum was a good idea then.