-No deal scenario means negative credit rating for U.K.
The U.K.'s withdrawal from the European Union without an agreement to replace existing arrangements is an increasing risk risen over recent months, which would damage the U.K.’s economy and result in a negative credit rating in a range of sectors from debt issuers in the U.K. and Europe, Moody's said.
'We still think the U.K. and the EU will eventually reach an agreement to preserve many - but not all - of their current trading arrangements, particularly around trade in goods. However, we believe the prospect of the U.K. leaving the EU without any agreement has risen materially,' said Colin Ellis, Moody's chief credit officer for Europe, the Middle East, and Africa, and co-author of the Cross-Sector report.
According to the report, leaving without a deal would damage the U.K.'s economic, fiscal and institutional strength.
“The immediate impact would likely be seen first in a sharp fall in the value of the British pound, leading to temporarily higher inflation and a squeeze on real wages over the two or three years following Brexit. This, in turn, would weigh on consumer spending and depress growth, with a risk of the U.K. entering a recession.”
- Turkey, U.K. enhancing ties
Meanwhile, Turkey and the U.K. are enhancing economic ties. On Wednesday, Turkish and British trade ministers signed a MoU during the sixth Turkey-U.K. Joint Economic and Trade Commission (JETCO) in London. The MoU aims to enhance economic and commercial ties between the two countries.
Speaking at a Turkey-U.K. business forum after the signing ceremony, Turkish Trade Minister Ruhsar Pekcan said both countries expected to further develop cooperation in the post-Brexit period.
'We plan to include services, agricultural products trade, e-trade, and public purchasing to make the agreement more comprehensive,' Pekcan said.
She invited British firms to invest in high-technology free-trade zones in Turkey.
'We will provide special incentives to technology-based projects and companies which operate in IT, informatics and software sectors,' Pekcan said.
Liam Fox, British secretary of state for international trade, highlighted the importance of Turkey's geopolitical position.
He stated that JETCO was the start of a richer relation between the two countries and added that it aimed to increase diversity in trade. Underlying the bilateral trade volume target of $20 billion, Fox said the target was set realistically. He noted that more than 200 prominent Turkish companies operate in the U.K.
Fox added that the number of British tourists visiting Turkey was expected to reach 3 million in 2018, up from 1.6 million last year.
He also noted that the U.K. supports Istanbul in its aim to become a financial center, which would include cooperation with the City of London.