UK credit rating cut amid Brexit fears
2 min read
The UK’s credit rating has been downgraded again over fears about the state of public finances and Brexit fears, Moody’s has announced.
"The ratings agency downgraded the UK from Aa1 to Aa2. Moody’s first downgraded Britain from AAA in 2013 as it claimed “growth would be sluggish over the next few years”.
Moody’s said leaving the European Union was creating economic uncertainty at a time when the UK's debt reduction plans were already off course.
Downing Street said the firm's Brexit assessments were "outdated".
The other major agencies, Fitch and S&P, did not downgrade the UK any further from the initial post-referendum cut in 2016.
Moody’s said the Government had "yielded to pressure and raised spending in several areas" including health and social care.
The credit agency said it did not believe the UK would generate the tax revenue necessary to pay for the rise in public spending.
Government policy was likely to be vague and patchy, after no clear winner emerged from June’s disastrous general election.
Brexit was likely to dominate the legislative process for the foreseeable future, making any innovative legislation needed to help public services without increasing budgets unlikely.
It added "any free trade agreement will likely take years to negotiate, prolonging the current uncertainty for business".
Moody's has also changed the UK's long-term issuer and debt ratings to "stable" from "negative".
Downing Street was critical of Moody’s for not taking the Prime Minister’s speech in Florence into account when they cut the UK’s credit rating.
They said Moody’s had reached their decision after a meeting on September 19th, but should have waited for the Prime Minister to lay out her vision for Brexit.
"The Prime Minister has just set out an ambitious vision for the UK's future relationship with the EU, making clear that both sides will benefit from a new and unique partnership," the spokesperson said.
"The foundations on which we build this partnership are strong."
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