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You can find the current article at its original source at https://www.theguardian.com/business/live/2016/jun/27/pound-shares-markets-brexit-crisis-osborne-lew-business-live
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| Britain credit rating downgraded as markets suffer more Brexit losses - as it happened | |
| (about 1 hour later) | |
| 10.48pm BST | |
| 22:48 | |
| Closing mini-summary | |
| OK, time to wrap up for tonight. A quick reminder of the key points. | |
| Britain has lost its final gold-plated AAA rating, following Standard & Poor’s decision to downgrade the country by two notches, to AA. | |
| S&P warned that the Brexit vote will lead to “less predictable, stable, and effective policy framework in the UK” and hurt growth. | |
| Fitch, another major credit rating, has also downgraded Britain to AA tonight, from AA+. | |
| The moves came after another day of losses on the stock markets. The FTSE 100 index lost another 156 points, while medium-sized companies on the FTSE 250 fell by 6%. | |
| Banking shares suffered most, amid fears of a UK recession, with Royal Bank of Scotland plunging by 25% at one point. | |
| The pound hit a new 31-year low against the US dollar, despite chancellor George Osborne trying to calm the market panic over the EU referendum vote. | |
| We’ll be back tomorrow with more live coverage of the market reaction to the ongoing Brexit crisis. Goodnight! | |
| 10.42pm BST | |
| 22:42 | |
| Surely we’ve suffered enough... | |
| England has lost a prime minister, soccer manager, shadow cabinet and AAA rating in just 4 days. Surely something of a record. | |
| 10.32pm BST | |
| 22:32 | |
| Tuesday’s Guardian front page focuses on the race to replace David Cameron as prime minister: | |
| Tuesday's Guardian front page:Battle lines drawn to replace PM #Tomorrowspaperstoday #bbcpapers pic.twitter.com/HbTpR08JfY | |
| 10.22pm BST | |
| 22:22 | |
| Some more front pages to digest before the morning: | |
| Tuesday's Metro via @ChrisCowley4 Brexit: Day of farce#Tomorrowspaperstoday #bbcpapers pic.twitter.com/SSH5qp6WDE | |
| Tuesday's Telegraph Business:UK stripped of final AAA rating as markets sour#Tomorrowspaperstoday #bbcpapers pic.twitter.com/xIYwezK5il | |
| Tuesday's Telegraph front page:Hunt's call for second referendum on EU deal#Tomorrowspaperstoday #bbcpapers pic.twitter.com/UD2lRcfAgy | |
| 10.21pm BST | |
| 22:21 | |
| The gloom gripping the City won’t have been helped by tonight’s unmitigated shambles in the football: | |
| Howard Archer of IHS Global Insight sums it up: | |
| The credit rating of the UK economy may have been downgraded by 2 notches by Standard & poor’s this evening; the football team deserves to be cut to junk status. | |
| So two downgrades and a loss from Iceland in #EURO2016 for #England. Can't imagine how this night could go worse for England #Brexit | |
| (PS: Well done Iceland) | |
| 9.34pm BST | 9.34pm BST |
| 21:34 | 21:34 |
| From New York, my colleague Sam Thielman reports on another bad day on Wall Street: | From New York, my colleague Sam Thielman reports on another bad day on Wall Street: |
| US stock markets were rocked again on Monday by the aftershocks of the UK’s referendum decision to quit the European Union. | US stock markets were rocked again on Monday by the aftershocks of the UK’s referendum decision to quit the European Union. |
| Since the results became known on Thursday, the major US markets have suffered their biggest two-day fall in 10 months. Monday’s dips came as the pound collapsed to its lowest point since 1985 and the UK lost its triple-A credit rating. | Since the results became known on Thursday, the major US markets have suffered their biggest two-day fall in 10 months. Monday’s dips came as the pound collapsed to its lowest point since 1985 and the UK lost its triple-A credit rating. |
| The Dow Jones Industrial Average finished the day down 260 points, or 1.5%, the S&P 500 dropped 1.8%, and the technology-heavy Nasdaq ended the day 2.5% down as the sell-off sparked by the Brexit vote in the UK continued to reverberate through the American market.... | The Dow Jones Industrial Average finished the day down 260 points, or 1.5%, the S&P 500 dropped 1.8%, and the technology-heavy Nasdaq ended the day 2.5% down as the sell-off sparked by the Brexit vote in the UK continued to reverberate through the American market.... |
| Related: US stock markets sink again following Brexit vote | Related: US stock markets sink again following Brexit vote |
| 9.31pm BST | 9.31pm BST |
| 21:31 | 21:31 |
| This is worth repeating... | This is worth repeating... |
| Fitch downgrades the UK. I note they list "lower immigration" as a reason to expect weaker economic growth #Brexit pic.twitter.com/TXT0Fq5RDP | Fitch downgrades the UK. I note they list "lower immigration" as a reason to expect weaker economic growth #Brexit pic.twitter.com/TXT0Fq5RDP |
| 9.21pm BST | 9.21pm BST |
| 21:21 | 21:21 |
| Why Fitch downgraded the UK | Why Fitch downgraded the UK |
| Fitch says it has downgraded Britain’s credit rating from AA+ to AA because the decision to leave the EU will have “a negative impact on the UK economy, public finances and political continuity.” | Fitch says it has downgraded Britain’s credit rating from AA+ to AA because the decision to leave the EU will have “a negative impact on the UK economy, public finances and political continuity.” |
| The rating agency warns that Britain faces an “abrupt slowdown in short-term GDP growth”, as businesses defer investment while tehy wonder how the Brexit vote will affect them. | The rating agency warns that Britain faces an “abrupt slowdown in short-term GDP growth”, as businesses defer investment while tehy wonder how the Brexit vote will affect them. |
| The agency says: | The agency says: |
| Fitch has revised down its forecast for real GDP growth to 1.6% in 2016 (from 1.9%), 0.9% in 2017 and 0.9% in 2018 (both from 2.0% respectively), leaving the level of real GDP a cumulative 2.3% lower in 2018 than in its prior ‘Remain’ base case. | Fitch has revised down its forecast for real GDP growth to 1.6% in 2016 (from 1.9%), 0.9% in 2017 and 0.9% in 2018 (both from 2.0% respectively), leaving the level of real GDP a cumulative 2.3% lower in 2018 than in its prior ‘Remain’ base case. |
| Fitch also fears that medium-term growth will also likely be weaker, as Britain will find it harder to export to the EU. Lower immigration, and a fall in investment from overseas, will also hurt the economy, as could a weaker pound. | Fitch also fears that medium-term growth will also likely be weaker, as Britain will find it harder to export to the EU. Lower immigration, and a fall in investment from overseas, will also hurt the economy, as could a weaker pound. |
| Fitch adds that Britain’s future trade relationship with the EU is crucial: | Fitch adds that Britain’s future trade relationship with the EU is crucial: |
| Statements by UK and EU leaders will provide some guidance on the UK government’s policy objectives, the likelihood of achieving them and the timeframe for negotiation. However, Prime Minister David Cameron has indicated that negotiations with the EU will not begin in earnest until 4Q16, and the final position may well not be known for several years. | Statements by UK and EU leaders will provide some guidance on the UK government’s policy objectives, the likelihood of achieving them and the timeframe for negotiation. However, Prime Minister David Cameron has indicated that negotiations with the EU will not begin in earnest until 4Q16, and the final position may well not be known for several years. |
| And Fitch also fears that Britain’s budget deficit will be higher than previously expected, as weaker economic growth means lower tax revenues. | And Fitch also fears that Britain’s budget deficit will be higher than previously expected, as weaker economic growth means lower tax revenues. |
| This implies that the general government debt ratio will continue rising over the forecast horizon, reaching 91% of GDP in 2017, compared with the debt ratio stabilising previously. | This implies that the general government debt ratio will continue rising over the forecast horizon, reaching 91% of GDP in 2017, compared with the debt ratio stabilising previously. |
| And then there’s the political crisis raging in Westminster; Fitch says this is also bad for Britain’s credit worthiness: | And then there’s the political crisis raging in Westminster; Fitch says this is also bad for Britain’s credit worthiness: |
| The outcome of the referendum has precipitated political upheaval, including the announced resignation of the Prime Minister, contributing to heightened uncertainty over government economic policies and diminished scope for policy implementation at the current conjuncture. | The outcome of the referendum has precipitated political upheaval, including the announced resignation of the Prime Minister, contributing to heightened uncertainty over government economic policies and diminished scope for policy implementation at the current conjuncture. |
| And there’s more..... | And there’s more..... |
| Furthermore, the fact that a majority of voters in Scotland opted for ‘Remain’ makes a second referendum on Scottish independence more probable in the short to medium term. The Scottish First Minister Nicola Sturgeon has indicated that a second referendum on Scottish independence is “highly likely”. A vote for independence would be negative for the UK’s rating, as it would lead to a rise in the ratio of government debt/GDP, increase the size of the UK’s external balance sheet and potentially generate uncertainty in the banking system, for example in the event of uncertainty over Scotland’s currency arrangement. | Furthermore, the fact that a majority of voters in Scotland opted for ‘Remain’ makes a second referendum on Scottish independence more probable in the short to medium term. The Scottish First Minister Nicola Sturgeon has indicated that a second referendum on Scottish independence is “highly likely”. A vote for independence would be negative for the UK’s rating, as it would lead to a rise in the ratio of government debt/GDP, increase the size of the UK’s external balance sheet and potentially generate uncertainty in the banking system, for example in the event of uncertainty over Scotland’s currency arrangement. |
| There’s more here (if you can face it): | There’s more here (if you can face it): |
| Fitch Downgrades the United Kingdom to 'AA'; Outlook Negative https://t.co/mJBLc8agMj pic.twitter.com/1B6J0hxhPs | Fitch Downgrades the United Kingdom to 'AA'; Outlook Negative https://t.co/mJBLc8agMj pic.twitter.com/1B6J0hxhPs |
| 9.08pm BST | 9.08pm BST |
| 21:08 | 21:08 |
| FITCH DOWNGRADES UK | FITCH DOWNGRADES UK |
| Britain’s credit rating has just suffered a double blow, with the news that Fitch has also downgraded it to AA. | Britain’s credit rating has just suffered a double blow, with the news that Fitch has also downgraded it to AA. |
| Now Fitch has downgraded the UK to AA too. Also negative outlook. Also inevitable. | Now Fitch has downgraded the UK to AA too. Also negative outlook. Also inevitable. |
| More details to follow.... | More details to follow.... |
| 9.06pm BST | 9.06pm BST |
| 21:06 | 21:06 |
| Wall Street suffers biggest two-day fall in 10 months | Wall Street suffers biggest two-day fall in 10 months |
| Take a deep breath, folks. Another day of market turmoil is over. | Take a deep breath, folks. Another day of market turmoil is over. |
| Wall Street has closed, with the Dow Jones industrial average shedding 260 points, or 1.5%. | Wall Street has closed, with the Dow Jones industrial average shedding 260 points, or 1.5%. |
| Credit card firm American Express was the biggest faller on the Dow, down around 3.9%. | Credit card firm American Express was the biggest faller on the Dow, down around 3.9%. |
| Reuters reports that Wall Street has suffered its biggest two-day fall in 10 months, since the worries about China’s slowing economy. | Reuters reports that Wall Street has suffered its biggest two-day fall in 10 months, since the worries about China’s slowing economy. |
| Updated | Updated |
| at 9.06pm BST | at 9.06pm BST |
| 8.53pm BST | 8.53pm BST |
| 20:53 | 20:53 |
| Britain’s Brexit crisis is going to dominate tomorrow’s papers. | Britain’s Brexit crisis is going to dominate tomorrow’s papers. |
| The Financial Times’ front page has just landed, focusing on the heavy losses on the stock markets and the pound’s drop to a 31-year low. | The Financial Times’ front page has just landed, focusing on the heavy losses on the stock markets and the pound’s drop to a 31-year low. |
| Tuesday's FT:Sterling and bank stocks hammered as Cameron seeks to calm markets#Tomorrowspaperstoday #bbcpapers pic.twitter.com/kTDrhyiYPi | Tuesday's FT:Sterling and bank stocks hammered as Cameron seeks to calm markets#Tomorrowspaperstoday #bbcpapers pic.twitter.com/kTDrhyiYPi |
| 8.37pm BST | 8.37pm BST |
| 20:37 | 20:37 |
| The FT’s economics editor, Chris Giles, says S&P’s downgrade is a cause for serious concern: | The FT’s economics editor, Chris Giles, says S&P’s downgrade is a cause for serious concern: |
| S&P no longer see UK institutions as a strength. Cuts credit rating TWO notches. Worse than financial crisis | S&P no longer see UK institutions as a strength. Cuts credit rating TWO notches. Worse than financial crisis |
| 8.30pm BST | 8.30pm BST |
| 20:30 | 20:30 |
| Shares are still falling in New York, with 30 minutes trading today. | Shares are still falling in New York, with 30 minutes trading today. |
| BREAKING: U.S. markets tumble to new session lows, Dow now down 335+ points, S&P down 2.2% https://t.co/u7XNvdBsax pic.twitter.com/vMeOUsbPLk | BREAKING: U.S. markets tumble to new session lows, Dow now down 335+ points, S&P down 2.2% https://t.co/u7XNvdBsax pic.twitter.com/vMeOUsbPLk |
| Financial stocks are among the big fallers, as in Europe today. | Financial stocks are among the big fallers, as in Europe today. |
| 8.25pm BST | 8.25pm BST |
| 20:25 | 20:25 |
| It’s been a really dramatic day in the financial world; here’s our updated news story: | It’s been a really dramatic day in the financial world; here’s our updated news story: |
| Related: UK loses triple-A credit rating after Brexit vote | Related: UK loses triple-A credit rating after Brexit vote |
| 8.12pm BST | 8.12pm BST |
| 20:12 | 20:12 |
| The scale of S&P’s downgrade tonight is unprecedented, says Reuters’ Jamie McGeever, showing the full impact of Brexit. | The scale of S&P’s downgrade tonight is unprecedented, says Reuters’ Jamie McGeever, showing the full impact of Brexit. |
| Britain's downgrade by S&P today was historic - the first time the ratings agency has ever cut a AAA sovereign rating by two notches. | Britain's downgrade by S&P today was historic - the first time the ratings agency has ever cut a AAA sovereign rating by two notches. |
| 8.04pm BST | 8.04pm BST |
| 20:04 | 20:04 |
| Back in 2012, the LabourList website gathered together George Osborne’s various warnings about the need to keep the AAA rating. | Back in 2012, the LabourList website gathered together George Osborne’s various warnings about the need to keep the AAA rating. |
| For example, in 2009, he declared: | For example, in 2009, he declared: |
| “I have argued it with my opponents in difficult economic times, when I warned them last autumn that the cupboard was bare and the discretionary borrowing had to stop – and now Britain faces the humiliating possibility of losing its international credit rating. | “I have argued it with my opponents in difficult economic times, when I warned them last autumn that the cupboard was bare and the discretionary borrowing had to stop – and now Britain faces the humiliating possibility of losing its international credit rating. |
| Here’s the full list: Some things George Osborne has said about the AAA credit rating | Here’s the full list: Some things George Osborne has said about the AAA credit rating |
| All good clean fun. But in the chancellor’s defense, he did warn the public not to vote for Brexit.... | All good clean fun. But in the chancellor’s defense, he did warn the public not to vote for Brexit.... |
| This must be about the first time in history a finance minister might actually think himself vindicated by a credit rating downgrade | This must be about the first time in history a finance minister might actually think himself vindicated by a credit rating downgrade |
| 7.52pm BST | 7.52pm BST |
| 19:52 | 19:52 |
| S&P held back the downgrade until the London stock market had closed, so the City hasn’t had chance to react yet. | S&P held back the downgrade until the London stock market had closed, so the City hasn’t had chance to react yet. |
| But over in New York, shares are falling deeper into the red on Wall Street. | But over in New York, shares are falling deeper into the red on Wall Street. |
| The Dow Jones industrial average has now shed 306 points, a fall of 1.75% today, on top of the 611 points shed during Friday’s tumble. | The Dow Jones industrial average has now shed 306 points, a fall of 1.75% today, on top of the 611 points shed during Friday’s tumble. |