Brexit Secretary David Davis. Getty LONDON — The UK is at risk of a sovereign credit rating downgrade if the government fails to strike a post-Brexit trade deal with the European Union, Moody's said on Wednesday.

Moody's, which is one of the world's big three credit rating companies, said the UK could lose its Aa1 rating if "core elements of the UK's current access to the EU single market" are lost through Brexit.

Britain's sovereign debt would be seen as riskier, potentially increasing the Treasury's borrowing costs, in the event of a rating downgrade.

"The likelihood of an abrupt and damaging exit with no agreement has increased since the referendum," Moody's said in an update on the UK's credit outlook. "The economy has started to slow, and growth prospects could bematerially weaker if the UK fails to reach a free trade arrangement with good access to the single market."

Political uncertainty, made worse by last month's election returning of a hung parliament, will make it harder for Chancellor Philip Hammond to protect the public purse, Moody's said, further increasing the risk of a downgrade.

"Political and fiscal risks have increased following the government's loss of its parliamentary majority in early elections in June, and the government is under significant pressure to raise spending," Moody's said. "Continuously higher budget deficits than expected and further delays in reversing the rising public debt trend would also be negative for the rating."

Kathrin Muehlbronner, the UK analyst for Moody's, says: "While the negotiations with the EU have recently started, it remains unclear whether the UK