Fitch
Ratings
has
maintained
its
negative
outlook
on
the
UK’s
credit
rating,
amid
uncertainty
stemming
from
the
nation’s
final
trading
relationship
with
the
EU
post-Brexit,
and
high
public
debt.
The
“AA-”
rating
was
maintained,
a
score
which
nations
including
France,
Ireland
and
South
Korea
also
share.
“The
UK’s
ratings
reflect
a
high-income,
large,
diversified
and
flexible
economy,
a
credible
macroeconomic
policy
framework,
deep
capital
markets
and
sterling’s
international
reserve
currency
status,
which
provides
ample
financing
flexibility,”
it
said.
“These
strengths
are
set
against
high
public
and
external
debt,
high
debt
service
costs
relative
to
peers
and
some
remaining
uncertainty
regarding
the
final
form
of
the
UK-EU
economic
relationship
post-Brexit.”
Moody’s
lifted
the
UK’s
rating
outlook
to
stable
in
October,
believing
“policy
predictability
has
been
restored”
following
last
year’s
mini-budget
chaos.
Fitch
fell
short
of
doing
the
same,
however.
“The
negative
outlook
reflects
uncertain
prospects
for
fiscal
consolidation,
given
the
challenging
macroeconomic
backdrop,
including
weak
growth
and
the
risk
of
more
persistent
inflation,
expenditure
pressures
and
the
proximity
of
general
elections,”
it
said.
“Recent
faster-than-expected
revenue
growth
has
been
directed
towards
tax
cuts
that
could
lift
the
UK’s
growth
potential
in
the
medium
term
but
fail
to
reduce
public
finances’
vulnerabilities
due
to
high
government
debt
and
borrowing
costs.”
For
this
year,
Fitch
expects
the
UK
gross
domestic
product
to
grow
0.5%,
but
economic
growth
will
ebb
to
0.3%
in
the
next
amid
a
“mild
recession”
beginning
at
the
end
of
2023
until
the
second-quarter
of
2024.
Growth
will
recover
to
1.8%
in
2025,
though
this
will
still
be
below
the
2.3%
median
for
an
“AA”-rated
nation.
“There
is
a
high
degree
of
uncertainty
regarding
the
impact
of
government
policies
on
long-term
growth
prospects,”
it
said.
“Annual
inflation
has
eased,
reflecting
lower
energy
and
food
prices,
but
core
inflation
remains
relatively
high,
signalling
strong
domestic
demand
pressures
and
a
tight
labour
market.
We
forecast
inflation
to
average
7.5%
in
2023
and
3.1%
in
2024,
above
the
forecast
3.7%
and
2.6%,
respectively,
for
the
median
‘AA’
rating
peers.”
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