London Daily

Focus on the big picture.
Thursday, Jul 24, 2025

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
Politic is a good business: Barack Obama’s Reported Net Worth Growth, 1990–2025
Thai Civilian Death Toll Rises to 12 in Cambodian Cross-Border Attacks
TSUNAMI: Trump Just Crossed the Rubicon—And There’s No Turning Back
Over 120 Criminal Cases Dismissed in Boston Amid Public Defender Shortage
UN's Top Court Declares Environmental Protection a Legal Obligation Under International Law
"Crazy Thing": OpenAI's Sam Altman Warns Of AI Voice Fraud Crisis In Banking
The Podcaster Who Accidentally Revealed He Earns Over $10 Million a Year
Trump Announces $550 Billion Japanese Investment and New Trade Agreements with Indonesia and the Philippines
US Treasury Secretary Calls for Institutional Review of Federal Reserve Amid AI‑Driven Growth Expectations
UK Government Considers Dropping Demand for Apple Encryption Backdoor
Severe Flooding in South Korea Claims Lives Amid Ongoing Rescue Operations
Japanese Man Discovers Family Connection Through DNA Testing After Decades of Separation
Russia Signals Openness to Ukraine Peace Talks Amid Escalating Drone Warfare
Switzerland Implements Ban on Mammography Screening
Japanese Prime Minister Vows to Stay After Coalition Loses Upper House Majority
Pogacar Extends Dominance with Stage Fifteen Triumph at Tour de France
CEO Resigns Amid Controversy Over Relationship with HR Executive
Man Dies After Being Pulled Into MRI Machine Due to Metal Chain in New York Clinic
NVIDIA Achieves $4 Trillion Valuation Amid AI Demand
US Revokes Visas of Brazilian Corrupted Judges Amid Fake Bolsonaro Investigation
U.S. Congress Approves Rescissions Act Cutting Federal Funding for NPR and PBS
North Korea Restricts Foreign Tourist Access to New Seaside Resort
Brazil's Supreme Court Imposes Radical Restrictions on Former President Bolsonaro
Centrist Criticism of von der Leyen Resurfaces as she Survives EU Confidence Vote
Judge Criticizes DOJ Over Secrecy in Dropping Charges Against Gang Leader
Apple Closes $16.5 Billion Tax Dispute With Ireland
Von der Leyen Faces Setback Over €2 Trillion EU Budget Proposal
UK and Germany Collaborate on Global Military Equipment Sales
Trump Plans Over 10% Tariffs on African and Caribbean Nations
Flying Taxi CEO Reclaims Billionaire Status After Stock Surge
Epstein Files Deepen Republican Party Divide
Zuckerberg Faces $8 Billion Privacy Lawsuit From Meta Shareholders
FIFA Pressured to Rethink World Cup Calendar Due to Climate Change
SpaceX Nears $400 Billion Valuation With New Share Sale
Microsoft, US Lab to Use AI for Faster Nuclear Plant Licensing
Trump Walks Back Talk of Firing Fed Chair Jerome Powell
Zelensky Reshuffles Cabinet to Win Support at Home and in Washington
"Can You Hit Moscow?" Trump Asked Zelensky To Make Putin "Feel The Pain"
Irish Tech Worker Detained 100 days by US Authorities for Overstaying Visa
Dimon Warns on Fed Independence as Trump Administration Eyes Powell’s Succession
Church of England Removes 1991 Sexuality Guidelines from Clergy Selection
Superman Franchise Achieves Success with Latest Release
Hungary's Viktor Orban Rejects Agreements on Illegal Migration
Jeff Bezos Considers Purchasing Condé Nast as a Wedding Gift
Ghislaine Maxwell Says She’s Ready to Testify Before Congress on Epstein’s Criminal Empire
Bal des Pompiers: A Celebration of Community and Firefighter Culture in France
FBI Chief Kash Patel Denies Resignation Speculations Amid Epstein List Controversy
Air India Pilot’s Mental Health Records Under Scrutiny
Google Secures Windsurf AI Coding Team in $2.4 Billion Licence Deal
Jamie Dimon Warns Europe Is Losing Global Competitiveness and Flags Market Complacency
×