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BRIEF-Moody's downgrades UK's rating to Aa2, changes outlook to stable​
September 22, 2017 / 9:12 PM / 2 months ago

BRIEF-Moody's downgrades UK's rating to Aa2, changes outlook to stable​

Sept 22 (Reuters) - Moody‘s:

* Moody’s downgrades UK’s rating to Aa2, changes outlook to stable​

* Moody’s says downgraded the United Kingdom’s long-term issuer rating to Aa2 from Aa1 and changed the outlook to stable from negative‍​

* Moody’s says also downgraded to Aa2 the Bank of England’s issuer and senior unsecured bond ratings from Aa1

* Moody’s says fiscal pressures will be exacerbated by erosion of UK’s medium-term economic strength

* Moody’s says erosion of UK’s medium-term economic strength likely to result from manner of departure from the European Union, among other factors

* Moody’s says outlook for UK’s public finances weakened significantly since negative outlook on Aa1 rating was assigned

* Moody’s says UK’s foreign and local currency bond ceilings and the local-currency deposit ceiling remain unchanged at Aaa/P-1

* Moody’s says believes UK government’s decision to leave EU Single Market & Customs Union as of March 29, 2019 will be negative for its medium-term economic growth prospects

* Moody’s says UK’s foreign-currency long-term deposit ceiling was lowered to Aa2 from Aaa, and the short-term deposit ceilings remain P-1

* Erosion of UK’s medium-term economic strength is likely to result from manner of exit from EU and by “increasingly” apparent challenges to policy-making

* Moody‘s, on UK, says private consumption has slowed sharply and business investment has been weak since 2016, most likely linked to Brexit-related uncertainty

* Moody’s says no longer confident UK government to be able to secure replacement free trade agreement with EU to mitigate negative economic impact of Brexit‍​

* Expect weaker public finances going forward, partly linked to economic slowdown, increasing political, social pressures to raise spending after 7 years of cuts

* ‍Moody’s says “more importantly for the UK’s credit profile, Moody’s does not expect growth to recover to its historic trend rate over the coming years”

* Brexit to dominate government’s legislative priorities for coming years; likely to be limited political capital, civil service capacity to address other challenges

* Moody’s says notes UK government may be softening negotiating stance in a number of areas to limit disruption to trade following UK’s exit‍​ from EU Source text for Eikon:

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