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DBRS Morningstar affirms UK at AAA on greater Brexit clarity after Tory win

DBRS Morningstar affirmed the U.K.'s long-term foreign- and local-currency issuer ratings at AAA on greater Brexit clarity after the Conservative Party's sweeping win at the Dec. 12 general election.

The Tories secured 365 seats out of the total 650 seats in Parliament, which will now allow Prime Minister Boris Johnson to expedite the Withdrawal Agreement into legislation and lead the U.K. out of the EU on Jan. 31, 2020. The U.K. will then need to work on a reaching a trade agreement with the EU before end-2020, though the deadline can be extended, DBRS Morningstar wrote.

The rating agency expects a more expansionary fiscal stance from the new Conservative government on the back of proposed new fiscal rules and a likely increase in public spending as a percentage of GDP due to new priorities.

DBRS Morningstar projects the U.K. economy will grow by 1.2% in 2019, having shown resilience amid Brexit-related uncertainty so far.

The ratings trend is stable.