Moody's Downgrades U.K.'s Credit Rating
September 22 2017 - 6:45PM
Dow Jones News
By Wiktor Szary
LONDON -- Moody's Investors Service downgraded Britain's rating
to Aa2 from Aa1 and changed the outlook to stable from negative,
saying Friday it sees weakened prospects for public finances as
well as a likely Brexit-linked economic slowdown ahead.
The outlook for the U.K.'s public finances has deteriorated
significantly in recent months, with the government's fiscal
consolidation plans increasingly in question, Moody's said.
This was linked partly to an economic slowdown already under
way, but also reflected increased political pressure on the ruling
Conservative Party to raise spending after seven years of fiscal
belt-tightening, Moody's said.
The U.K.'s fiscal position is set to deteriorate further as a
result of its exit from the European Union, a move that will likely
hurt the country's economy in the medium term, Moody's said.
Spurred by the pound's sharp depreciation after the Brexit vote
last year, accelerating inflation has squeezed consumer spending,
one of the key drivers of the U.K. economy, causing it to slow
visibly in recent months.
Proponents of Brexit have suggested that the pound's decline
could boost overseas demand for British products, strengthening the
manufacturing industry and decreasing the economy's reliance on
domestic demand. But so far, the economy has showed little sign of
that shift.
Quarterly growth stood at 0.3% in the April-June period, a
slight improvement on the preceding quarter, but still less than
half the pace of growth at the end of last year.
Write to Wiktor Szary at Wiktor.Szary@wsj.com
(END) Dow Jones Newswires
September 22, 2017 18:30 ET (22:30 GMT)
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