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UK Debt Outlook Remains Negative, Credit Agency Fitch Confirms

Credit rating agency Fitch Ratings maintained its “negative” outlook on the United Kingdom’s economy, adding pressure to the administration of Prime Minister Rishi Sunak. This puts the UK at risk of losing its AA- rating, which is also held by France, the Republic of Ireland, and South Korea.

Fitch chose not to follow in the footsteps of Moody’s Investors Service, which raised its UK outlook a month ago from negative to stable after claiming that “policy predictability” had been restored. This places increasing pressure on Sunak, who has been under scrutiny by his Conservative Party as he struggles to shift public opinion in his favor ahead of a likely election next year.

Fitch projects UK economic growth to be 0.5% in 2023, with a mild recession pulling growth down to 0.3% in 2024 before leaping to a 1.8% growth rate in 2025. The government’s fiscal deficit is expected to amount to 5.4% of GDP for 2023. The UK’s outlook was cut last October when Sunak’s, predecessor, Liz Truss, announced a £45 billion package of tax cuts.

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