Global Markets Take Another Drubbing On 'Brexit' Worries
Britain's vote to leave the European Union spurred another wave of selloffs in global markets on June 27, with the British pound falling to a fresh 31-year low despite government reassurances.
Britain's leaders insisted the economy was strong enough to cope with the country's departure from the world's largest trading bloc, but that didn't prevent world stocks from taking their worst two-day fall since the aftermath of the collapse of Lehman Brothers in late 2008.
With London at risk of losing its status as Europe's financial center, European bank shares had their worst two-day fall on record. Stock indexes in the United States and Europe lost another 2 percent to 3 percent of their value after posting falls of as much as 12 percent on June 24.
Two ratings agencies stripped Britain of its sterling credit rating and warned that more downgrades could follow.
Standard & Poor's Ratings Service slashed Britain's last remaining triple-A rating by two notches to double-A. Fitch Ratings also cut the U.K. one notch to AA.
"In our opinion, [the Brexit vote] is a seminal event and will lead to a less predictable, stable, and effective policy framework in the U.K.," S&P said.
"The Brexit result could lead to a deterioration of the U.K.'s economic performance, including its large financial services sector, which is a major contributor to employment," it said.
S&P and Fitch both cited "risks to the constitutional and economic integrity of the U.K." as Scotland's strong vote to remain in the EU could raise the prospect of another referendum on Scottish independence.
In a sign the Brexit vote is hitting business confidence in Britain, a leading business group said 20 percent of its members planned to move some of their operations out of the U.K.
The Institute of Directors said a survey of its 1,000 members showed three out of four believe leaving the EU will be bad for business.
While the British pound sank to $1.31, its lowest level since September 1985, the euro, which is also seen as vulnerable to the exit of the EU's second-largest economy, fell another 1.2 percent.
