Fitch credit rating agency has lowered its rating for the United Kingdom. As a result, borrowing money for the British government may become more expensive. The strong support package to fight the corona pandemic was one of the reasons for Fitch, as was the uncertainty about the future trade relationship with the European Union.
Fitch now puts the British rating at AA-, where it was previously AA. That write-down reflects the expected increase in debt as the country pumps hundreds of billions of pounds into the economy because of the corona outbreak. In addition, the credit rating agency notes that even without the corona virus, the expenditure of the Johnson government, which intended to spend much more money on infrastructure, would increase.
Fitch’s outlook is negative, which may indicate that there will be another downgrade soon. The credit rating agency does not assume that reducing post-2020 government debt is a priority for the UK government. Fitch thinks government debt is even growing to more than 100 percent of gross domestic product (GDP). Last year it was 84.5 percent.
Britain has long been rated AAA, the highest it is. In recent years, this has repeatedly been downgraded by the Brexit vote and the following political chaos. The United Kingdom now has a comparable rating to Belgium and the Czech Republic.