Fitch switches Brexit view to UK going to WTO terms

FILE PHOTO: Small toy figures are seen in front of a Brexit logo in this illustration picture, March 30, 2019. REUTERS/Dado Ruvic/Illustration/File Photo

LONDON (Reuters) - Credit rating agency Fitch has revised its Brexit view and now expects the UK-EU trade relationship to move to World Trade Organisation (WTO) terms at the start of next year due to the lack of progress in talks.

“With limited progress so far in negotiations on a free trade agreement (FTA) and time running out... we now assume that UK-EU trade will move to WTO terms in January,” Fitch’s chief economist, Brian Coulton, said during an online conference on Wednesday.

“It is very hard to model this but we have knocked around 2% off our 2021 forecast for the UK because of this change in assumption,” he said, adding the ratings agency expected the UK’s economic recovery to stall in the first half of next year.

Fitch is due to review the UK’s AA- negative outlook rating on 25 September.

Reporting by Marc Jones; editing by Dhara Ranasinghe