S&P downgrades UK debt rating by two notches to AA

Ratings agency Standard&Poor´s stripped the UK´s sovereign long-term debt of its top AAA rating, downgrading it by two notches to AA.

S&P said the UK´s membership of the European Union had allowed its economy to attract larger amounts of low-cost capital and skilled labour than would have otherwise been the case.

Alongside London´s standing as a global financial centre, EU-membership had bolstered Sterling´s status as a reserve currency, S&P said.

Analysts at S&P also believed that the vote for 'Remain' in Northern Ireland and Scotland created wider constitutional issues for the entire UK.

S&P attached a 'negative' outlook to its new ratings.

Speaking to Bloomberg TV on Friday, Stephen Major, Managing Director for Fixed Income Research at HSBC, said he "didn't care" if the ratings agencies downgraded the UK´s debt because the country was a sovereign nation.

On Friday, Moody´s lowered its outlook on the UK´s long-term sovereign debt rating from 'stable' to 'negative', albeit while keeping it at Aa1, the second-highest possible.

The other major ratings agency, Fitch, holds UK debt at an equivalent A-plus.

As of 19:48 BST the yield on the benchmark 10-year Gilt was lower by 15 basis points to 0.934% and cable lower by 3.60% to 1.3187.