June 23, 2024

Standard & Poor's downgrades UK rating after tax cut plans

Standard & Poor’s downgrades UK rating after tax cut plans

Rating agency Standard & Poor’s lowered its “AA” rating for British government debt from stable to negative. Thus the US rating agency was reacting to a possible increase in UK borrowing following last week’s government budget statement.

“Our updated fiscal guidance comes with additional risks if, for example, UK economic growth turns out to be weaker due to a further deterioration in the economic environment,” Standard & Poor’s said yesterday. Standard & Poor’s also forecast that the UK will enter a technical recession in the coming quarters and that its gross domestic product will shrink by 0.5 per cent through 2023.

Report: Britain wants to control spending

After a week of financial turmoil, Britain wants to control public spending, according to a press report. British Finance Minister Kwasi Quarting wrote in an article published in the Telegraph yesterday that he will announce a realistic plan to reduce debt in November.

He also defended his mini budget in the report. Although some measures will not have everyone’s approval, “we have no other choice.” Last week, Kwarteng announced a broad package of aid to mitigate higher energy prices and tax cuts. According to experts, Brexit is slowing down the economy on the island.

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