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Fitch Ratings on Friday affirmed the UK’s long-term foreign-currency issuer default rating at AA-, but placed a negative outlook on the debt rating.
Fitch said the negative outlook on the UK’s sovereign rating is due to ‘rising government debt and significant fiscal risks derived from the UK’s weaker macroeconomic outlook primarily due to the severe energy shock’.
Some of these problems are self-inflicted. Fitch cited ‘fiscal policy reversal’ as UK Prime Minister Rishi Sunak seeks to ‘re-establish the UK’s commitment to fiscal sustainability and policy predictability by reversing most of the previous administration’s unfunded fiscal package’.
Fitch said it expects government debt to rise to 107% of UK gross domestic product by 2024 and stabilise around the level over the medium-term. It noted this is more than double the median 49% forecast for AA-rated sovereign issuers.
By Tom Waite, Alliance News editor
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