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Such an outcome would affect everything from banks to buses and could result in a recession, the ratings company said in a report published in London Tuesday.
“We still think that the EU and the U.K will eventually come to an agreement that captures many -- but not all -- of their current trade arrangements,” said Colin Ellis, Moody’s managing director for credit strategy. “But the probability that negotiations will fail and no agreement will be reached is substantial.” [...]
In good news for finance, Moody’s found that the impact of a “no deal” scenario on the industry would be muted. Passporting, allowing U.K.-based firms to offer services across the EU, is “highly unlikely to persist,” but “the incremental costs that banks will incur in order to mitigate the loss of revenues will be moderate and manageable.”
In terms of the economy, “no deal” could see growth slowing and even an outright recession. These factors, along with higher unemployment and inflation, would weigh on credit quality. Restrictions on immigration could exacerbate skills shortages, while the pound would be likely to fall sharply, Moody’s said.