Fitch Rating lowers outlook for UK credit rating from stable to negative

• Fitch cuts outlook for British government debt from stable to negative.
• The move comes after new PM Liz Truss launched a hasty program of tax cuts funded by debt.
• A large and unfunded fiscal package announced as part of the new government’s growth plan could lead to an increase in fiscal deficits.

Wednesday, Fitch Rating reduced the outlook for its credit rating of British government debt from stable to negative after the new prime minister, Liz Truss, launched a hasty program of tax cuts funded by debt.

Fitch Rating stated in a statement: “The large and unfunded fiscal package announced as part of the new government’s growth plan could lead to a significant increase in fiscal deficits over the medium term.”

“We consider that statements by the Chancellor (finance minister) hinting at the possibility of additional tax cuts and the likely modification of fiscal rules legislated in January reduce the predictability of fiscal policy.”

Truss pledged to steer Britain toward development as she wrapped the turbulent annual conference of the ruling Conservative party on Wednesday.

After only one month in office, Truss has alienated people, financial markets, and many of her own parliamentarians.

Despite the bungled implementation of her budget plan, which resulted in a humiliating U-turn on a commitment to cut income tax for the top incomes, she maintained in her speech that the status quo was not an option.

However, her refusal to elaborate on her economic plan failed to calm the nervous markets, and the pound fell 2.01 percent against the dollar, reaching a low of $1.1241 following her speech.

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