S & P warns on UK reserve currency status as Brexit hardens - Telegraph
|Ravi Bhatia, the director of sovereign ratings in charge of Britain, Standard & Poor’s (S&P), warned during his interview with the Daily Telegraph on late-Thursday, the UK faces the risk of losing its reserve currency status if it fails to retain the access to the European single markets.
Key Quotes:
“There seems to be this view that ‘we’re a big important economy, the Europeans export a lot to us, so they have got to give us what we want’, but is that really true?"
"Individually most of these countries don’t export that much to the UK, and were seeing a hardening of attitudes.”
“Before Brexit, the trajectory was planned fiscal consolidation, but we’re no longer certain we’re going to see that.”
“If they ramp up fiscal spending they’ll get a stimulus and that is good in one way as it will help boost growth, but they have to finance that spending; it will raise the deficit, and the debt stock is already high."
“To be a reserve currency means that the world has trust in you and is happy to hold its savings in your currency. It creates a pool of available capital. If you lose this and sterling becomes just another currency, a key advantage is lost.”
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