Outlook down to negative
Fitch is pessimistic about UK credit rating
10/06/2022 03:42 am
“Growth, grow, develop,” promises truce to Britain’s new prime minister at Tory party convention. However, it is not clear how it intends to finance its announced financial package. Rating agency Fitch fears that the budget deficit will increase significantly.
Bad news for new British Prime Minister Liz Truss, who is already under heavy pressure due to her tax and fiscal policies: ratings agency Fitch has lowered the outlook for Great Britain’s creditworthiness from stable to negative, as agency announced. Rating agency Standard & Poor’s (S&P) recently took a similar step. With the impending downgrade, loans to the state will become more expensive.
Fitch explicitly cited the government’s fiscal policy in London as justification: “The large and unfunded fiscal package announced as part of the new government’s growth plan could lead to a significant increase in the deficit in the medium term. ” who has also come under pressure from within the party Truss defended his fiscal policy course in a speech at the party convention of his conservative Tories in Birmingham on Wednesday. The goal is economic “growth, development, growth”.
Being dissatisfied with his plans, he had previously pulled back from planned tax cuts for the top earners. Nevertheless, their course on the financial markets is also questionable as the counter-financing of the schemes is unclear and high levels of fresh debt are expected. Britain is grappling with its worst economic crisis in decades and high inflation. Electricity and gas prices for consumers could rise 80 percent in October, and many companies are on the verge of collapse due to high energy costs. The British pound had fallen to the lowest level ever against the dollar. The economic course of the truce also led to a significant increase in interest rates.
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