Credit rating agency Moody’s has posted an extraordinary warning about Kwasi Kwarteng’s fiscal policies.
Colin Ellis, the firm’s chief credit officer for Europe, has said the UK could lose its reputation for institutional stability with the financial markets after the government’s “ideologically” driven mini-budget.
“Given the financial turmoil and testing of the UK’s credibility, it is not a great look if you revise the fiscal rules to meet your own targets,” he said. “Credibility is very easy to lose and it can be hard to win it back. The government can introduce credible targets without moving the goalposts.”
fourth highest borrower category of Aa3. A downgrade would represent a 50 per cent to 60 per cent increase in the UK’s credit risk and put Britain in the same category as countries such as China and Japan, Ellis said.
Britain is a “strong and very creditworthy sovereign of which we have learnt things that raise questions about the rating.”
He said that the prime minister’s decision to reverse the abolition of the 45p top rate of income tax was “not substantive from a fiscal point of view” and said there was little evidence to suggest that tax cuts can provide a permanent boost to growth and productivity.