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Moody's downgrades UK's credit rating

Staff Writer |
Moody's has downgraded the UK's credit rating, citing concerns about public finances and the effect of Brexit.

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Moody's was the first major credit ratings agency to strip the UK of its UK rating rating in 2013 and it has now cut the rating from Aa1 to Aa2.

The credit ratings agency said the outlook for public finances has "weakened significantly" since it last changed the country's rating.

Its report said: "Moody's expects weaker public finances going forward, partly linked to the economic slowdown under way but also reflecting the increasing political and social pressures to raise spending after seven years of spending cuts.

"Since 2015, the Government has been finding it increasingly difficult to implement the spending cuts that it has been targeting, in particular on welfare spending.

"More recently, the Government has yielded to pressure and raised spending in several areas, including for health and adult social care.

"It also agreed to above-budget pay increases for some public sector workers.

"While these additional expenditures will be funded out of current budgets, the pressure to continue to increase spending in the coming years is likely to remain high, in particular on health care and the public sector wage bill.