MOODYS DOWNGRADES UK RATING TO Aa2 from Aa1 (now matches ratings of S&P and Fitch); outlook revised to stable from negative
The key drivers for the decision to downgrade the UK's ratings to Aa2 are as follows:
1. The outlook for the UK's public finances has weakened significantly since the negative outlook on the Aa1 rating was assigned, with the government's fiscal consolidation plans increasingly in question and the debt burden expected to continue to rise;
2. Fiscal pressures will be exacerbated by the erosion of the UK's medium-term economic strength that is likely to result from the manner of its departure from the European Union (EU), and by the increasingly apparent challenges to policy-making given the complexity of Brexit negotiations and associated domestic political dynamics.
Concurrently, Moody's has also downgraded to Aa2 the Bank of England's issuer and senior unsecured bond ratings from Aa1. The rating on its senior unsecured medium-term note (MTN) program was downgraded to (P)Aa2 from (P)Aa1. The short-term issuer ratings were affirmed at Prime-1. The ratings outlook was also changed to stable from negative.