As the agency announced, it has downgraded the outlook on both the country’s rating and the central bank’s rating to negative from stable.
Fitch attributed the UK’s poor outlook to “a large and unfunded fiscal package announced as part of the new government’s growth plan”. This could lead to a “significant increase” in the budget deficit in the medium term. Fitch forecasts 7.8 percent of GDP this year and 8.8 percent next year if no compensatory measures are taken.
“The change in fiscal stance will push the public debt ratio to 109 percent of GDP by 2024 from an estimated 101 percent in 2022, reflecting a higher primary deficit and weaker growth outlook,” Fitch said. The company also pointed to higher government bond yields in recent months. Fitch sees inflation at 8.9 percent this year, and it will gradually ease to 4 percent by 2024.
The credit rating for the Bank of England is directly linked to the United Kingdom.
Fitch rates both the UK and the BoE at AA-.
S&P recently kept the outlook for Great Britain negative due to mounting financial risks.
By Stephen Nacrosis
London (Dow Jones)
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