Fitch Ratings painted a gloomy picture of the U.K.’s economic prospects on Tuesday, warning that the British government was poorly prepared for quitting the European Union (EU).
“It is very clear that the U.K. government has done no effective contingency planning for Brexit,” Ed Parker, Fitch’s head of Europe, Middle East and Africa sovereigns, said at a conference on Tuesday.
Fitch downgraded the U.K.’s credit rating from AA+ to AA immediately after the country voted in a referendum in June to quit the EU. The country is on “negative outlook,” as Fitch is considering further downgrades in the medium-term. Its next scheduled review date is December 9.
The result of the referendum surprised pundits, with odds seen on a victory for “remain.” David Cameron, who had campaigned for remain, resigned as U.K. prime minister following the vote and was replaced by Theresa May.
Parker said the U.K. was highly unlikely to retain full access to the EU free market for goods and services once it quits the bloc, given that May had committed to tougher controls on immigration. Greater control of national sovereignty, particularly regarding which immigrants can work in the country, was a key driver for Britons voting to quit the EU. The EU allows free movement of workers between its countries and the U.K. is a popular destination due to its language and relatively large and thriving economy.