LONDON, Sept. 22 (Xinhua) -- Moody's Investors Service (Moody's) on Friday downgraded Britain's long-term issuer rating to Aa2 from Aa1.
The rating agency also changed the Britain's outlook to stable from negative. The British senior unsecured bond rating was downgraded to Aa2 from Aa1 as well.
One of key drivers for the decision to downgrade the UK's ratings to Aa2 is the outlook for the British public finances has weakened significantly since the negative outlook on the Aa1 rating was assigned, with the government's fiscal consolidation plans increasingly in question and the debt burden expected to continue to rise, it said in a press release.
Meanwhile, fiscal pressures will be exacerbated by the erosion of the British medium-term economic strength that is likely to result from the manner of its departure from the European Union, and by the increasingly apparent challenges to policy-making given the complexity of Brexit negotiations and associated domestic political dynamics, added the release.
Concurrently, Moody's has also downgraded to Aa2 the Bank of England's issuer and senior unsecured bond ratings from Aa1. The rating on its senior unsecured medium-term note program was downgraded as well. The short-term issuer ratings were affirmed at Prime-1. The ratings outlook was also changed to stable from negative.
The rating agency believes that the British government's decision to leave the EU Single Market and customs union as of 29 March 2019 will be negative for the country's medium-term economic growth prospects. Aside from the direct impact on the Britain's credit profile, the loss of economic strength will further exacerbate pressures on fiscal consolidation, it said.
