The outlook for the UK 's credit rating has been downgraded to negative by a leading agency in the wake of the Brexit vote, with warnings higher borrowing costs could hit ordinary households in the longer term.

Moody’s, one of the big three credit rating agencies, made the change to a previous assessment that the country's credit rating was stable, following the vote to leave the European Union.

The agency said it expected any savings from the UK no longer having to contribute to the EU would be outweighed by the negative impact on economic growth.

The move came as the finance world continued to reel from the implications of the Leavc vote, with concerns over cuts to investment, job losses and global recession.

In the immediate aftermath following the vote, the pound plunged at one point to a 31-year low, while an estimated $2 trillion US dollars was wiped off global stock markets by the end of Friday.

Moody’s issued a statement which said the outlook for the UK's credit rating was now negative, rather than stable. But it remains for now at Aa1, one level below the highest AAA rating.

The agency warned the UK could have to renegotiate its trade relations with the EU for several years, bringing diminished confidence, lower spending and investment, and resulting in weaker growth.

"Over the longer term, should the UK not be able to secure a favourable alternative trade arrangement with the EU and other countries, the UK's growth prospects would be materially weaker than currently expected," it said.

The statement added: "In Moody's view, the negative effect from lower economic growth will outweigh the fiscal savings from the UK no longer having to contribute to the EU budget."

Moody's and fellow ratings agency Fitch stripped the UK of its AAA rating before the EU referendum, while Standard & Poor's warned on Friday it could follow suit after the vote. Moritz Kraemer, Standard & Poor’s chief ratings officer, said: “We think that a AAA rating is untenable under the circumstances.”

Speaking on Radio 4, Colin Ellis, chief credit officer at Moody’s said the status of the UK's credit rating could impact on households in the long term.

He said: “The government borrowing rate is normally the benchmark - it is the rate at which other interest rates in the economy are set.

"A lower rating would typically correspond to higher borrowing costs, and that would be felt not just by the government but by businesses and households in the longer term."

The prospect of financial firms which employ tens of thousands of staff now losing unrestricted access to the EU and being forced to move outside the UK has also been raised by European finance ministers.

Jeroen Dijsselbloem, the head of the Eurogroup of finance ministers and Dutch finance minister, said British banks may have to move jobs outside the the UK if the country leaves the single market.

The head of France’s central bank Francois Villeroy de Galhau also said London’s financial institutions would lose their crucial “financial passport” which allows them to trade freely in the EU.

Major financial institutions have already begun to look at shifting some operations outside of the UK following the Brexit vote, it has been claimed.

On Friday American investment bank Morgan Stanley it would "adapt accordingly" to Brexit after reports it was moving 2,000 jobs from London to Dublin and Frankfurt.

But UK economist Gerard Lyons, an economic advisor to Boris Johnson who backed Leave, has insisted London is not at risk losing its status as Europe's dominant financial centre.

"We have the depth of skills, knowledge and experience that's hard to replicate," he said.

Yesterday it was also claimed potential bidders for the remaining Tata Steel plants which employ 11,000 people across the Uk were close to pulling out of talks with its Indian owners in the wake of the Brexit result.