Fitch Lowers U.K.'s, Bank of England's Outlooks to Negative
06 Ottobre 2022 - 12:06AM
Dow Jones News
By Stephen Nakrosis
Fitch Ratings on Wednesday lowered its outlooks on the United
Kingdom and the Bank of England to negative.
Both entities had previously had a stable outlook, Fitch
said.
Fitch said its outlook for the U.K. reflects the "large and
unfunded fiscal package announced as part of the new government's
growth plan," which could "lead to a significant increase in fiscal
deficits over the medium term."
Fitch said the U.K.'s general government deficit will be 7.8% of
GDP in 2022 and increase to 8.8% in 2023, unless there are
compensatory measures.
"The change in fiscal trajectory will push general government
debt to 109% of GDP by 2024 from an estimated 101% in 2022,
reflecting both higher primary deficits and a weaker growth
outlook," Fitch said. The agency also pointed out increased
government bond yields in recent months, "reflecting higher
interest rates and uncertainty regarding the fiscal strategy."
Fitch said it sees average inflation increasing to 8.9% this
year before gradually declining to 4% in 2024.
Fitch said the Bank of England is the monetary arm of the UK
sovereign, "and as such its credit profile is aligned with that of
the sovereign government."
Fitch affirmed the U.K.'s long-term foreign-currency issuer
default rating at 'AA-. It also affirmed the BoE's IDR at AA-.
Last month, S&P Global Ratings lowered its outlook on the
U.K. to negative from stable, reflecting what it said were "rising
risks to the U.K.'s fiscal position over the next two years."
Write to Stephen Nakrosis at stephen.nakrosis@wsj.com
(END) Dow Jones Newswires
October 05, 2022 17:51 ET (21:51 GMT)
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