Ratings agency boss believes Brexit deal will be done 'based on facts'
The head of credit rankings at one of the world’s largest ratings agencies has said that a Brexit deal remains the most likely outcome from the protracted negotiations between Britain and the EU.
However, Yann Le Pallec added that despite Ireland being rated as ‘stable’ at present, the country remains exceptionally vulnerable to the fallout from whatever way Brexit unravels.
Le Pallec, global head of credit ratings with ratings agency Standard & Poors, was in Dublin to discuss sustainable finance at the European Insurance Forum at Croke Park.
He said recent developments in the UK Parliament - such as the UK Supreme Court ruling unanimously that Parliament had not been prorogued, or suspended, by Prime Minister Boris Johnson - had led S&P to reaffirm its call that a Brexit deal remains the most likely eventuality.
“We have to make a call, and we still see there as being an agreement. But we are naturally monitoring the situation closely,” Mr Le Pallec said.
“Our calls are based on facts, and we have to make calls and assumptions. Recent developments point towards a managed exit. A hard Brexit is not in anyone’s interests. The economic relationship will have to be maintained, even from an external perspective."
While S&P currently rates Ireland as being ‘stable’ and the UK as being ‘negative’ in outlook, he said that could not be taken as any indication that Ireland was in a better position to withstand economic shocks from Brexit.
“It’s all relative, the sovereign ratings are not at the same level,” he said. “The UK is straight AA with a negative outlook, and Ireland is two notches below and stable. The higher you’re rated the more stable you are. All things being equal, Ireland is more likely to diminish quickly from a ratings perspective. The Irish rating is also likely to be more volatile.”
