Moody's cuts United Kingdom credit rating amid 'erosion of economic strength'

Moody's cuts United Kingdom credit rating amid 'erosion of economic strength'”

Moody's Investors Service downgraded the UK's credit rating amid economic uncertainty and concerns about the country's public finances.

At the end of last week, Moody's then made a further cut to its United Kingdom rating, warning Brexit negotiations were creating "a high level of uncertainty over the economic outlook" at a time when the UK's debt reduction plans were already under pressure.

Moody's, one of the major ratings agencies, downgraded the United Kingdom to an Aa2 rating from Aa1.

He said: "All May has done is simply delay the economic pain caused by an extreme Brexit".

The government said Moody's analysis happened before Theresa May's speech in Florence on Friday.

Moody's said the government had "yielded to pressure and raised spending in several areas" including health and social care.

The UK lost its AAA credit rating from all the major credit rating agencies in June past year after the Brexit vote.

Moody's said it expects United Kingdom government spending to be "significantly higher than under current budgetary plans", while revenues are unlikely to compensate.

Regarding the UK's trading future with the European Union, the agency said that it is "no longer confident that the United Kingdom government will be able to secure a replacement free trade agreement with the European Union which substantially mitigates the negative economic impact of Brexit".

It also said Brexit would dominate legislative priorities, so there could be limited capacity to address "substantial" challenges, adding that "any free trade agreement will likely take years to negotiate, prolonging the current uncertainty for business". Moody's stripped Britian of its top-notch AAA rating in 2013.

The decision to downgrade was made on 19 September, before the Prime Minister's speech to European Union leaders in Florence last Friday, in which she set out her aims for a two year transition period.

Dowd added: "For the second time under the Tories the UK's credit rating has been downgraded, and on this occasion citing their lack of faith in the chancellor to meet his own spending targets as a result of unfunded spending commitments, such as the deal with the DUP".

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