S&P Downgrades Britrain's Outlook to 'Negative' Amid Brexit Risks

Standard & Poor's (S&P) Ratings Services said Friday it had downgraded the United Kingdom's outlook from stable to negative amid the risk posed by the Prime Minister David Cameron's decision to hold a referendum on leaving the European Union.

MOSCOW (Sputnik) — The referendum on EU membership could also increase Britain’s deficits and private short-term external debt, the ratings agency added.

"The outlook revision reflects our view that the decision of the newly elected Conservative majority government to hold a referendum on the UK's EU membership by 2017 represents a risk to growth prospects for the UK's financial services and export sectors, as well as the wider economy," S&P said in the statement.

The Conservative Party's strategy could also affect Britain’s long-term economic prospects "more than previously anticipated," the service said.

The foreign direct investments (FDI), which Britain attracted when joined the European Community in 1973, have been playing an important role in the United Kingdom’s economic growth prospects, the agency said.

As long as the United Kingdom is a member of the European Union, the country could receive a more positive external assessment, even despite its high external debt, S&P concluded.

In the run-up to the UK May 7 general elections, the issue of Britain's membership in the European Union became hotly-discussed. After the election victory, British Prime Minister and Conservative Party leader David Cameron reaffirmed his commitment to holding a referendum on membership in the bloc by the end of 2017.