25/09/2017 - Moody's Downgrades Britain


Ratings agency Moody's downgraded Britain's credit rating on Friday, saying the government's plans to bring down its heavy debt load had been knocked off course and Brexit would weigh on the economy.

A few hours after Prime Minister Theresa May set out plans for new ties with the European Union, Moody's cut the rating by a further notch to Aa2, underscoring the economic risks that leaving the bloc poses for the world's fifth-biggest economy.

Britain has worked down its budget deficit from about 10 percent of economic output in 2010, shortly after the global financial crisis hammered the country, to 2.3 percent.

But Moody's - which stripped Britain of its top-notch AAA rating in 2013 - said the outlook for public finances had weakened significantly as May's government softened the austerity drive of former prime minister David Cameron and his finance minister George Osborne.

The government hit back, saying Moody's assessment of the Brexit hit to the economy was "outdated" and that May had set out an "ambitious vision for the UK's future relationship with the EU" in her speech on Friday.

But a Moody's official said the speech made no difference to the agency's gloomy long-term view for Britain's economy.

The speech itself delivered by Prime Minister Theresa May said that a Brexit implementation period would last for around two years, but failed to deliver any further insight in to the heavily debated topic of the brexit bill and the UK governments willingness to pay. 


The euro slipped in early Asian trading after Germany's election showed surging support for a far-right party that left Chancellor Angela Merkel scrambling to form a governing coalition.

Nevertheless Merkel did win a fourth term in office on Sunday but will have to build an uneasy coalition to form a government after her conservatives hemorrhaged support in the face of a surge by the far-right.

Despite winning the most votes, Merkel's bloc slumped to its worst result since 1949 and her current Social Democrat coalition partners said they would go into opposition after slumping to 20.7 percent in projections, a post-war low.

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