Beautiful Virgin Islands

Thursday, Jun 26, 2025

Moody's: UK's economic outlook now 'negative', ratings agency says

Moody's: UK's economic outlook now 'negative', ratings agency says

The UK's economic outlook has been lowered to "negative" by ratings agency Moody's due to political instability and high inflation.
Moody's changed the UK's outlook - which is a marker of how likely it is to pay back debts - from "stable".

Rating agencies, in essence, rate a country on the strength of its economy.

Moody's along with another of the big credit rating agencies Standard & Poor's (S&P) maintained their assessments of the UK's credit rating.

Rating agencies give governments (or large companies) a score on how likely they are to pay back their debt.

The rating affects how much it costs governments to borrow money in the international financial markets. In theory, a high credit rating means a lower interest rate (and vice versa).

Each agency gives countries around the world a specific credit rating score. These range from a top mark of "AAA", which stands for "prime", down to the lowest reading of "D", which stands for "in default".

Moody's said there were "risks to the UK's debt affordability", but kept its rating of Aa3, the fourth-highest level on its scale.

Meanwhile, S&P maintained the UK's rating of AA - its third highest rating level - and maintained its previously-changed outlook from stable to negative.

The reports published on Friday do not mean the UK's credit rating has been downgraded, but a negative outlook indicates it could be downgraded at a later date. The other outlooks countries can be given are positive, or stable, and any outlook period typically lasts 12 to 18 months.

Moody's said there were two "drivers" behind its decision to change the UK's economic outlook.

It said the first was "the increased risk to the UK's credit profile from the heightened unpredictability in policymaking amid a volatile domestic political landscape".

Moody's said this challenged the UK's "ability to manage the shock arising from weaker growth prospects and high inflation".

The rating's agency said it viewed the government's mini-budget, the reversal of the majority of the policies in it, and the change in prime minister as a "continuing reflection of the weakening predictability of fiscal policymaking seen in previous years".

Moody's assessment comes after government borrowing costs rose sharply in the aftermath of the mini-budget in September when investors became spooked by the then chancellor Kwasi Kwarteng pledging huge tax cuts without saying how the government would pay for them.

The current chancellor, Jeremy Hunt, reversed the majority of the tax cuts from the mini-budget on Monday in attempt to calm the markets, but the resignation of Prime Minister Liz Truss means economic policies are on hold.

"The government's initial inability to deliver a credible policy response to address investor concerns around this unfunded stimulus further weakened the UK's policy credibility, which is unlikely to be fully restored by the subsequent decision to reverse most of the tax cuts," Moody's said.

Moody's said the second driver of its decision to change the outlook was the "heightened risks to the UK's debt affordability from likely higher borrowing and the risk of more persistent inflation".

A spokesman for the Treasury said global financial markets had been "subject to significant volatility in recent weeks".

"While no national government can eliminate this, we can give certainty about the sustainability of public finances in the UK," a statement added.

"The underlying fundamentals of the British economy remain strong, with the UK having the second lowest net debt to GDP ratio in the G7 and unemployment at its lowest level in almost 50 years."

The spokesman said the government was focused on "delivering economic stability and sustainable growth".

Government borrowing costs rose on Friday, while the pound sank as investors reacted to gloomy economic data amid the political turmoil.

The interest rate - or yield - on bonds due to be repaid in 30 years' time rose back above 4%, making government borrowing more expensive. They had hit 5.17% in the aftermath of the mini-budget.

Meanwhile, the yield on bonds due to be repaid in five years' time, which underpins the cost of new five-year fixed rate mortgages, rose to 4.09%.

The Treasury said the chancellor would set out how the government will get debt falling on 31 October, alongside a full forecast from the Office for Budget Responsibility on his economic policies.
Newsletter

Related Articles

Beautiful Virgin Islands
0:00
0:00
Close
Australia's Star Casino Secures $195 Million Rescue Package Amid Challenges
UK to Enhance Nuclear Capabilities with Acquisition of F-35A Fighter Jets
Russian Shadow Payments via Cryptocurrency Reach $9 Billion
Explosions Rock Doha as Iranian Missiles Target Qatar
“You Have 12 Hours to Flee”: Israeli Threat Campaign Targets Surviving Iranian Officials
Macron and Merz: Europe must arm itself in an unstable world
Germany and Italy Under Pressure to Repatriate $245bn of Gold from US Vaults
Airlines Evaluate Flight Cancellations Amid Escalating US-Iran Tensions
Starmer Invites Innovators to Join Government Talent Scheme
UK Economy’s Strong Opening Quarter Shows Signs of Cooling
Harrods Seeks Court Order to Secure Al Fayed Estate for Victims
BA and Singapore Airlines Cancel Dubai Flights Amid Middle East Tensions
Trump Faces Backlash from MAGA Base Over Iran Strikes
Meta Bets $14 B on Alexandr Wang to Drive AI Ambitions
WATCH: Israeli forces show the aftermath of a massive airstrike at Iran's Isfahan nuclear site
FedEx Founder Fred Smith, ‘Heart and Soul’ of the Company, Dies at 80
Chinese Factories Shift Away from U.S. Amid Trump‑Era Tariffs
Pimco Seizes Opportunity in Japan’s Dislocated Bond Market
Labubu Doll Drives Pop Mart to Status as China’s Most Valuable Toy Maker
Global Coal Demand Defies Paris Accord Goals
We have new information and breaking details to share about what is shaping up to be a historic air campaign tonight
Six Massive Bombs Dropped on Fordow; Trump: 'A Historic Moment for the U.S., Israel, and the World'
Fordow: Deeply Buried Iranian Enrichment Site in U.S.–Israel Crosshairs
United States Conducts Precision Strikes on Iran’s Nuclear Sites
US strikes Iran nuclear sites, Trump says
Pakistan to nominate Trump for Nobel Peace Prize.
BBC Demands Perplexity AI Immediately Stop Using Its Content
Telegram Founder: I Will Leave My Fortune to Over 100 of My Children
Political Turmoil Resurfaces in Belgium Amid Economic Concerns
Fed policymakers divided on timing of interest rate cuts
Trump signals imminent agreement with Harvard University
Inheritance tax referendum alarms Swiss billionaire community
Japan cancels bilateral security meeting amid US defence demands
AI skeptic Emily Bender warns that ‘the emperor has no clothes’
Israel Confirms Assassination of Quds Force Commander in Tehran
16 Billion Login Credentials Leaked in Unprecedented Cybersecurity Breach
Senate hearing on who was 'really running' Biden White House kicks off
Iranian Military Officers Reportedly Seek Contact with Reza Pahlavi, Signal Intent to Defect
FBI and Senate Investigate Allegations of Chinese Plot to Influence the 2020 Election in Biden’s Favor Using Fake U.S. Driver’s Licenses
Vietnam Emerges as Luxury Yacht Destination for Ultra‑Rich
Plans to Sell Dutch Embassy in Bangkok Face Local Opposition
China's Iranian Oil Imports Face Disruption Amid Escalating Middle East Tensions
Trump's $5 Million 'Trump Card' Visa Program Draws Nearly 70,000 Applicants
DGCA Finds No Major Safety Concerns in Air India's Boeing 787 Fleet
Airlines Reroute Flights Amid Expanding Middle East Conflict Zones
Elon Musk's xAI Seeks $9.3 Billion in Funding Amid AI Expansion
Trump Demands Iran's Unconditional Surrender Amid Escalating Conflict
Israeli Airstrike Targets Iranian State TV in Central Tehran
President Trump is leaving the G7 summit early and has ordered the National Security Council to the Situation Room
Taiwan Imposes Export Ban on Chips to Huawei and SMIC
×