The UK's credit rating could be downgraded more by ratings agency Moody's. The UK is currently rated Aa2 - the third highest grade.
Moody's has also changed the UK's long-term issuer and debt ratings to "stable" from "negative".The agency said that Brexit has triggered an "erosion in institutional strength" that threatens the UK's financial credibility. It also said Brexit would dominate legislative priorities, so there could be limited capacity to address "substantial" challenges.The last time that the UK's rating was downgraded, in 2017, there was little impact on borrowing costs but things can change.
The Moody's report said "deep divisions within society and the political landscape" underpin its decision because they are reducing the UK's ability to make policy decisions. It said even a deal with the European Union over Brexit will be effective, that uncertainty over the future of trade is unlikely to diminish. Moody's also criticised the general election promises to raise spending with "no clear plan" to finance it.Considering this warning, The Conservative Party said: "This election is about ending paralysis in Parliament and delivering certainty on Brexit, and our commitment to produce a robust, costed manifesto." The government said the country had a robust economic record and had made substantial progress in reducing the deficit.