S&P downgrades UK rating outlook

The international rating agency S&P Global Ratings has affirmed the UK’s long-term and short-term foreign and national currency ratings at ‘AA/A-1+’.

At the same time, the forecast of long-term ratings was changed to “negative” from “stable”, according to a press release from the agency.

The UK government on September 23 unveiled a tax cut plan, in addition to its previously announced measures to provide widespread support for households to pay their electricity bills. As a result, according to S&P GR analysts, the country’s budget deficit will increase annually by an average of 2.6% of GDP until the end of 2025.

At the same time, net public debt will continue to grow, in contrast to previous expectations, which assumed its decline as a percentage of GDP starting from 2023. As a result, in 2025 it will reach 97% of GDP, according to the agency’s experts.

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“We believe our updated fiscal outlook is subject to additional risks, such as if UK economic growth is weaker due to a further deterioration in the economic environment, or if borrowing costs for the government rise more than expected on the back of market forces and monetary tightening. politics,” the agency said in a statement.

The British economy will be in a technical recession in the coming quarters, S&P GR predicts.

At the end of next year, GDP is expected to decline by 0.5%, and then rise by 1.4% in 2024. In April, analysts expected an increase in these indicators by 2.3% and 2.2%, respectively. The revision was driven mainly by significantly higher energy costs and weaker global economic growth.

Agency experts predict inflation in Britain at 9.5% this year, 5.8% in 2023 and below 2% in the next 2 years.

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