LONDON – Ratings agency Standard & Poor’s says a vote to leave the European Union could jeopardize the pound’s standing as an international reserve currency, potentially threatening the country’s credit rating.
The warning comes amid another dire report on the impact on Britain’s economy. The Institute for Fiscal Studies says the U.K. could face two more years of austerity in the event Britain votes to leave the 28-nation bloc on June 23.
S&P analyst Frank Gill says that a British exit from the EU could deter foreign direct investment and “other capital inflows.”
A reserve currency is held by governments of other countries as part of their foreign exchange reserves and is considered as safe to use to pay off foreign debt.