London Daily

Focus on the big picture.
Tuesday, Mar 10, 2026

Pound falls again as agency downgrades outlook for UK's credit rating to 'negative'

Pound falls again as agency downgrades outlook for UK's credit rating to 'negative'

Fitch takes aim at the apparent conflict between government policy and Bank of England action to fight inflation, warning that it is concerned by the levels of borrowing the chancellor is likely to need to fund the growth plan.

A measure of confidence in the UK's creditworthiness has been slashed by another major ratings agency in the wake of the mini-budget, piling further pressure on the under-fire pound.

Fitch revealed on Wednesday night that it had cut the outlook for its credit rating on UK government debt to "negative" from "stable".

It maintained its overall rating - with AAA being the ideal verdict - at AA-.

The shift reflected, it said, mounting concern over the level of borrowing required to fund the chancellor's tax and spending pledges made in the Commons last month.

Financial markets delivered a stinging verdict on the package, dubbed a growth plan by Kwasi Kwarteng, with sterling eventually plunging to an all-time low against the dollar.

Investors also demanded higher rates of return for holding UK government debt, with the Bank of England later intervening to buy long-dated bonds to prevent a crisis for pension funds.

A series of U-turns have since helped the pound and bond yields recover some poise.

The UK currency was, however, trading back towards $1.13 on Thursday morning though that partly reflected a rekindling of dollar strength after further oil market turbulence.

Fitch revealed its decision days after a similar move by rival Standard & Poor's.

It said of the chancellor's mini-budget: "The large and unfunded fiscal package announced as part of the new government's growth plan could lead to a significant increase in fiscal deficits over the medium term."

The agency hit out at the lack of independent budget forecasts from the Office for Budget Responsibility (OBR) in the statement and the policy clash that sees the government trying to grow the economy at a time when the Bank of England is trying to shrink demand in its fight against inflation.

It added: "Although the government reversed the elimination of the 45p top rate tax... the government's weakened political capital could further undermine the credibility of and support for the government's fiscal strategy."

Sky News revealed on Wednesday that Mr Kwarteng was due to meet bank bosses on Thursday amid concerns about the impact of the recent market turmoil on home loan provision.

It has emerged that the average mortgage interest rate has risen to above 6%, meaning households are paying the greatest portion of their income on mortgage payments since 1989 - exacerbating the wider cost of living crisis.

Newsletter

Related Articles

0:00
0:00
Close
Roman Abramovich Signals Legal Fight if UK Seeks to Seize Chelsea Sale Funds
UK Ready to Back Emergency Oil Reserve Release as Middle East Conflict Pushes Prices Higher
Study of 40,000 Articles Sparks Debate Over Alleged Anti-Muslim Bias in UK Media
US and UK Army Chiefs Strengthen Cooperation on the Future of Armored Warfare
Britain’s Search for the Next ARM Intensifies as Startups and Investors Target the Semiconductor Frontier
Three US Strategic Bombers Arrive at RAF Fairford as Iran Conflict Intensifies
Cancer Death Rates in the UK Fall to the Lowest Level on Record
UK Government Bond Yields Retreat Slightly After Sharp Spike Triggered by Middle East Conflict
UK Chancellor Warns Middle East War Could Push Inflation Higher
UK Prime Minister Warns Iran Conflict Could Drive Up Prices and Threaten Economic Stability
Trump Declines UK Offer to Deploy Aircraft Carriers to Middle East Amid Iran Conflict
Prince Harry and Meghan Markle to Return to Australia After Seven Years for Philanthropic and Business Engagements
UK Government Signals Independence From Washington as Cooper Says Britain Does Not Agree With Trump on Every Issue
UK Experts Warn AI Chatbots Are Fueling Surge in Claims of Organised ‘Satanic’ Ritual Abuse
UK Political Parties Divided Over Strategy as Iran Conflict Reshapes Foreign Policy Debate
Britain Discloses Secret Military Repair Hubs Operating Inside Ukraine
Trump Says US No Longer Needs UK Carrier Support After Delayed Offer Amid Iran Conflict
Why Britain Has Become Involved in the US-Israel Military Campaign Against Iran
UK Gas Storage Falls to Under Two Days as Iran Conflict Jolts Global Energy Markets
UK Warned to Brace for Economic Shock as Iran War Drives Global Energy Price Surge
Starmer and Trump Hold First Call After Public Dispute Over Iran Conflict
UK Dentists Returned £1.3 Billion to Government as Shift Toward Private Care Accelerates
Expert Warns UK Must Build Emergency Food Stockpiles to Prepare for Climate Shocks or War
UK Plans Charter Flight to Evacuate British Nationals from Gulf as Regional Conflict Disrupts Air Travel
Families of Zimbabwe’s Liberation Fighters Call on Britain to Help Locate Skulls Taken During Colonial War
Iran’s Ambassador Warns Britain to ‘Be Very Careful’ Over Deeper Role in Expanding Middle East War
UK Military Leadership Defends Britain’s Defensive Role in Expanding Middle East Conflict
Four U.S. Strategic Bombers Arrive in Britain as Iran War Intensifies
Soham Murderer Ian Huntley Dies After Violent Attack in High-Security Prison
UK Lawmakers and Experts Condemn Scale of Overseas Human Remains Held in British Museums
Royal Navy Aircraft Carrier HMS Prince of Wales Placed on Standby for Potential Deployment
United Kingdom Confirms U.S. Military Using British Bases for Operations Targeting Iranian Missile Sites
Starmer Defends UK Role in Iran Conflict After Renewed Criticism from President Trump
Blue Owl Reveals £36 Million Exposure After Collapse of UK Lender Serving Wealthy Clients
UK Asylum Reform Plan Triggers Fierce Debate Over Border Control and Humanitarian Impact
US Stealth Bombers Head to UK Base as Trump Issues Stark Warning to Iran
UK Deputy Prime Minister Says Legal Case Could Exist for British Strikes on Iranian Missile Sites
Investigators Link Mysterious Parcel Fires Across Europe to Russian Intelligence Operation
Debate Intensifies Over Britain’s Legal Justification for US Military Operations Launched From UK Bases
Britain Faces Heightened Energy Price Risks as Iran-Linked Tensions Threaten Global Oil and Gas Supplies
British Counter-Terror Police Arrest Four Suspected of Spying on Jewish Community for Iran
Axel Springer Agrees $770 Million Deal to Acquire Britain’s Daily Telegraph
Iceland Supermarket Drops Trademark Challenge Against Icelandic Government in Long-Running Naming Dispute
UK Defence Secretary Visits Cyprus Following Scrutiny of Britain’s Response to Drone Attacks
Questions Grow Over Britain’s Military Readiness as Response to Iran Conflict Draws Scrutiny
UK Offers Failed Asylum Seeker Families Up to Forty Thousand Pounds to Leave Voluntarily
Saharan Dust Could Bring ‘Blood Rain’ to Parts of the UK as Weather Systems Shift
UK Deploys Additional Typhoon Fighter Jets to Qatar and Helicopters to Cyprus Amid Rising Middle East Tensions
Experts Urge Britain to Accelerate Renewable Energy Push as Global Conflicts Drive Up Costs
British Public Shows Strong Reluctance to Join Wider War in Iran
×