The UK’s credit rating has been downgraded by Moody’s due to spending and Brexit fears

Is this a blow to the UK?

Moody’s, who is a major credit rating agency, has downgraded the UK’s credit rating, citing “spending and Brexit fears.”

Moddy’s report said: “Moody’s expects weaker public finances going forward, partly linked to the economic slowdown under way but also reflecting the increasing political and social pressures to raise spending after seven years of spending cuts.

“Since 2015, the Government has been finding it increasingly difficult to implement the spending cuts that it has been targeting, in particular on welfare spending.

“More recently, the Government has yielded to pressure and raised spending in several areas, including for health and adult social care.

“It also agreed to above-budget pay increases for some public-sector workers.

“While these additional expenditures will be funded out of current budgets, the pressure to continue to increase spending in the coming years is likely to remain high, in particular on health care and the public-sector wage bill.”

Moody’s further said that pressure on public funds will be “exacerbated” because of 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.”

Moody’s has downgraded the UK from “stable” to “negative,” the British government has said that Moody’s assessment is “outdated.”

The government said: “The prime minister has just set out an ambitious vision for the UK’s future relationship with the EU, making clear that both sides will benefit from a new and unique partnership.

“The foundations on which we build this partnership are strong.”

The government added: “We are not complacent about the challenges ahead, but we are optimistic about our bright future.”