Moody's downgrades UK credit rating amid Brexit fears

UK

The UK's credit rating was cut by major credit agency Moody's.

The investor service downgraded the country's long-term issuer rating to Aa2 from Aa1 over concerns that Brexit could hit the economy at a time when the government's debt reduction plans are already behind schedule.

Read more: Here's how eight business groups reacted to Theresa May's Brexit speech

Moody's said that the government's approach to public finances was "increasingly in question" and the the debt burden is likely to rise.

It said that "the government has yielded to pressure and raised spending in several areas". Meanwhile "revenues are unlikely to compensate for higher spending."

The "increasingly apparent challenges" of Brexit also dragged down the rating, with the firm saying it no longer expected a replacement free trade deal to be negotiated.

Read more: Theresa May proposes a transition period during Brexit speech in Florence

Downing Street said the firm's outlook was "outdated".

Moody's said it had come to the decision to change the rating earlier this week, before announcing it yesterday evening, meaning it was not linked to Prime Minister Theresa May's speech Florence speech on Brexit yesterday.

But a representative for the agency told the BBC's Today programme that the forecast was still up to date "in terms of what we think is going to happen".

Read more: UK GDP growth picked up in second quarter but it's still near bottom of G20

Full story: Moody's downgrades UK credit rating amid Brexit fears: City A.M.

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