The chaos within the British government in the wake of the sudden resignation of former Prime Minister Liz Truss has dealt a blow to the nation’s economic prospects.
Moody’s, the internationally respected investor rating agency, downgraded the UK’s economic outlook to “negative” from “stable” on Friday.
The agency’s analysts cited “heightened unpredictability in policymaking amid weaker growth prospects and high inflation” for the shift.
“Risks to the UK’s debt affordability from likely higher borrowing and risk of a sustained weakening in policy credibility” also threaten Britain’s national economic health, the agency said.
Government borrowing ballooned to £20 billion in September.
Despite the ominous downgrade, Moody’s credit rating for the UK remained unchanged, at Aa3, one of its highest — a reflection of the nation’s historic economic resilience, the agency said.
That means the cost to the British government to borrow money in international financial markets will likely not increase.
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