Ratings agency, Moody’s, has cast doubt on the UK holding onto its Aa1 credit rating following the unexpected and chaotic general election.
Theresa May’s inability to secure a majority and slow talks with the DUP have, for many, been perceived as an indicator that EU talks will be put on hold while the country attempts to regain some form of political stability. At the very least, observers are expressing concern over the UK’s ability to reach a reasonable agreement with the EU with so many political problems present at home.
Meanwhile, the hung parliament has cast doubts on the Government being able to reduce its deficit in the planned timeframe, further provoking Moody’s' observations that the UK may soon struggle to repay its debts.
A reduced credit score could spell trouble for the UK, with lenders set to charge higher rates for Government borrowing due to the perceived risk of lending to the UK.
Moody's’ announcement has lead to a further collapse in the value of the pound, which had already taken a beating last week when it became apparent the ruling Conservative Party had failed to secure its much-needed majority.
At the time of writing, Sterling is sat at a seven-month low against the Euro, with announcements that Theresa May plans to push ahead with Brexit negotiations as planned, exacerbating concern as hopes for a ‘soft-Brexit’ are dashed by perceptions that the Government’s plans to leave the single market remain unchanged.
Britain’s credit rating could be downgraded after last week's general election delivered a hung parliament, Moody’s has warned. The ratings agency said the lack of a decisive majority party could put the brakes on negotiations on Britain leaving the European Union, which would have a negative impact on the UK’s credit rating.