S&P just downgraded the UK

S&P Global Ratings on Monday downgraded the United Kingdom’s credit rating to AA from AAA, with a “negative” outlook.

The downgrade from the highest rating awarded by the agency comes following the UK’s surprise vote to leave the European Union last week.

Brexit “is a seminal event, and will lead to a less predictable, stable, and effective policy framework in the UK,” the ratings agency said in a statement.

While AA is still a solid rating, this action indicates that S&P is less confident in the UK’s ability to repay its sovereign debt following the Brexit vote. Over the weekend, several analysts warned about the risk of an outright recession hitting the country, with Goldman Sachs analysts forecasting one next year.

On Friday, Moody’s Investors Service, another ratings agency, lowered its outlook on the UK’s credit rating to “negative” from “stable.”

S&P added that the vote for Remain in Scotland and Northern Ireland creates wider constitutional issues for the whole country. The agency pointed out risks to the pound’s role as a reserve currency; it suffered its biggest plunge ever against the dollar on Friday.

“The negative outlook reflects the risk to economic prospects, fiscal and external performance, and the role of sterling as a reserve currency, as well as risks to the constitutional and economic integrity of the UK if there is another referendum on Scottish independence,” S&P said.

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