Moody's slash UK credit rating amid fears Brexit could damage economy's growth

Brexit fears: The Government branded the firm's assessment 'outdated'
AFP/Getty Images
Fiona Simpson23 September 2017
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Britain’s credit rating has been slashed over fears Brexit could harm the country’s economic growth.

Moody’s, one of the UK’s top ratings agencies, downgraded the country to an Aa2 from an Aa1 rating earlier this week.

The firm claimed plans to leave the EU had sparked economic certainty at a time when the Government’s debt reduction plans appeared to have run off course, the BBC reported.

However, Downing Street hit back at the downgrading and branded the organisation’s Brexit assessments “outdated”.

Prime Minister Theresa May outlined the UK's vision for Brexit in a landmark speech in Florence
Getty Images

Fitch, another top agency lowered the UK’s rating from AA+ to AA and S&P cut their grade from AAA to AA.

Moody's told the BBC that the government had "yielded to pressure and raised spending in several areas" including health and social care.

Experts also claimed that the Tories failure to win a majority in the snap election left the country in a state of economic uncertainty.

Michel Barnier, the European Commission member in charge of Brexit negotiations with Britain.
AFP/Getty Images

It added "any free trade agreement will likely take years to negotiate, prolonging the current uncertainty for business".

Moody's has also changed the UK's long-term issuer and debt ratings to "stable" from "negative".

The firm stripped the country of its highest rating AAA in 2013.

Government sources told the BBC the latest downgrade followed a meeting on 19 September, and did not consider the prime minister's speech on Friday, in which she outlined her vision for Brexit.

The source said: "The Prime Minister has just set out an ambitious vision for the UK's future relationship with the EU, making clear that both sides will benefit from a new and unique partnership.

"The foundations on which we build this partnership are strong."

Credit rating agencies rate a country on the strength of its economy - scoring governments or large companies on how likely they are to pay back their debt.

A cut rating can negatively impact how much it costs governments to borrow money in the international financial markets.

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