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Moody's warns of heightened uncertainty and credit implications across all sectors in the UK in case of a Brexit Getty

Moody's Investors Service has warned that if Britain opts to leave the European Union, the economic costs "would outweigh the potential benefits" and there would be "credit implications for a range of bond issuers, including the UK government, banks, insurers and non-financial companies".

In its latest report, Moody's said: "Brexit would also be credit negative for the EU as it could increase the risk of further exits from the bloc and heighten support for independence movements elsewhere." In the report titled UK and EU: Brexit Presents Modest And Manageable Credit Challenges For Exposed Issuers, the agency said there would be "heightened uncertainty" and "modestly weaker economic growth in the UK over the medium-term" as a fallout of UK's exit from the EU.

Moody's reiterated its stance that it might assign a negative outlook to the UK's Aa1 sovereign rating following a Brexit. However, it added that even after an exit, both the UK and the EU would continue their trade deals to avoid any major disruption in their existing financial ties.

Moody's further said that a Brexit would be credit negative for non-financial corporate issuers in the country, warning that any new trade barriers would pose a more significant threat to corporate creditworthiness. For the insurance industry, the impact of a Brexit would be manageable; and for UK-based banks, it would be limited unless they have "cross-border business models," Moody's said, adding that it does not expect any significant rise in unemployment and policy rates or any fall in property prices.

Another report from global advisory firm Oxford Economics, also warned that Britain could see weaker growth following an exit, Reuters reported. The firm added that even if the UK has access to EU markets post the exit, it cuts taxes and retains the number of EU immigrants it presently has, the country's economy would be less than 1% smaller in 2030 as compared to if it had stayed in the bloc

However, the impact would be higher if it reduces its immigrant population. Oxford Economics's estimates show that after leaving the EU, if Britain cuts its immigrant population to half, and if trade and other regulatory ties with the EU are less favourable, the UK economy would be about 3.9% smaller than otherwise.