Fitch Ratings could lower the U.K.'s credit rating in early 2019 if the country leaves the EU without a formal withdrawal deal, the rating agency's top sovereign analyst told Reuters.
James McCormack said a no-deal Brexit would likely send Britain into a recession. The downturn might be limited if the turmoil is resolved quickly, but a more pessimistic outcome could produce a 0.6% contraction for 2019 as a whole.
"Clearly the deficit would be going up more substantially in the deeper recession scenario and that that would almost certainly reverse the course of the debt-to-GDP reduction and would almost certainly have a rating impact," McCormack said.
McCormack's statement comes as British Prime Minister Theresa May fights for the Brexit deal she reached with the EU amid growing opposition in the Parliament and calls for a second referendum.
May told lawmakers Dec. 17 in the House of Commons that a Brexit vote will occur during the week of Jan. 14, 2019. Lawmakers were supposed to vote on the deal Dec. 11, but May postponed it after admitting that the measure would have faced a huge defeat.
Labor leader Jeremy Corbyn, however, said the date is "unacceptable in any way" and tabled a motion of no-confidence in the prime minister for not allowing the House of Commons to vote immediately on the Brexit deal.
"I expect we would be in a position to make a call upon hard Brexit itself, since we would know the parameters of exit and then could take a view on the economic implications," McCormack said.
The rating agency in October affirmed the U.K.'s long-term foreign-currency issuer default rating at AA but maintained the negative outlook.