Ratings agency Moody’s has changed the outlook for the UK to negative due to the current political and economic challenges facing the country.
Heightened unpredictability in policymaking, weaker growth prospects, high inflation and risks to the UK's debt affordability from likely higher borrowing were all cited by Moody’s in its rationale for placing the country’s outlook as negative.
“The evolution of policymaking, and the UK government's ability to engender confidence in its commitment to fiscal prudence, will be a material consideration for Moody's in resolving the negative outlook,” the ratings agency said.
Despite the lowering of the outlook, Moody’s retained the UK’s credit rating at triple-A, saying that this “reflects the UK's economic resilience supported by its wealthy, competitive and diversified economy”.
It added: “The structure of the UK government debt, with a very long average maturity of around 15 years, as well as a deep domestic investor base adds a degree of resilience to the credit profile in the face of shocks.”
While the UK may have avoided a downgrade, the changing of the outlook to negative will be of concern for investors, given the country has long been considered a safe haven during global economic uncertainty.