London Daily

Focus on the big picture.
Thursday, Jul 10, 2025

UK economy to slump over 10%, debts to surge: Moody's

UK economy to slump over 10%, debts to surge: Moody's

Britain will suffer the sharpest peak-to-trough economic slump of any major economy this year, rating agency Moody's warned on Friday, and the coronavirus crisis will push up national debt as a share of GDP by nearly a quarter.
Moody’s said the UK government’s latest 30 billion pound ($37.9 billion) stimulus package, announced this week, would aid a gradual economic recovery but add further pressure to the UK’s fiscal position.

“The UK’s public debt ratio will likely rise by 24 percentage points of GDP or more relative to 2019 levels,” a group of Moody’s analysts wrote in a note, taking the debt to 109% of GDP this year.

“We forecast a contraction of 10.1% in the UK’s GDP for this year, but expect a gradual subsequent recovery on the back of the easing in lockdown measures, with growth rebounding to 7.1% next year.”

Moody’s rates Britain Aa2 with a negative outlook following a series of cuts since the country voted to leave the European Union in mid-2016.

Later on Friday, Fitch, another ratings agency, said it now expected Britain’s economy to shrink by 9% this year, a bigger hit than its previous projection of a 7.8% contraction, and the budget deficit would leap to as much as 17% of economic output.

Fitch said the government’s 30 billion pound stimulus package would probably only cost 21 billion pounds - largely because millions of furloughed workers were likely to be sacked later this year, rather than their employers taking a 1,000 pound government grant to reinstate them.

Britain is on course to take state borrowing to World War Two levels, though the government has said finances will return to a sustainable footing over the medium term.

Moody’s said high-frequency indicators suggested that economic activity has gradually begun to recover after reaching a trough in April, when GDP is estimated to have contracted by just over 20%.

“Our forecast estimates a sharper peak-to-trough contraction for the UK than for any other G20 economy, taking account of our view that lingering uncertainty around Brexit will hold back the recovery in the second half of the year,” Moody’s said.

Last month the International Monetary Fund was less downbeat about Britain, forecasting that France, Italy and Spain would all suffer bigger downturns than Britain this year.

Moody’s said Britain’s Autumn budget, due in the final quarter of the year, would be key to providing greater clarity on the UK’s future path of government indebtedness.
Newsletter

Related Articles

0:00
0:00
Close
Severe Heatwave Claims 2,300 Lives Across Europe
NVIDIA Achieves Historic Milestone as First Company Valued at $4 Trillion
Declining Beer Consumption Signals Cultural Shift in Germany
Linda Yaccarino Steps Down as CEO of X After Two Years
US Imposes New Tariffs on Brazilian Exports Amid Political Tensions
Azerbaijan and Armenia are on the brink of a historic peace deal.
Emails Leaked: How Passenger Luggage Became a Side Income for Airport Workers
Polish MEP: “Dear Leftists - China is laughing at you, Russia is laughing, India is laughing”
BRICS Expands Membership with Indonesia and Ten New Partner Countries
Weinstein Victim’s Lawyer Says MeToo Movement Still Strong
U.S. Enacts Sweeping Tax and Spending Legislation Amid Trade Policy Shifts
Football Mourns as Diogo Jota and Brother André Silva Laid to Rest in Portugal
Labour Expected to Withdraw Support for Special Needs Funding Model
Leaked Audio Reveals Tory Aide Defending DEI Record
Elon Musk Founds a Party Following a Poll on X: "You Wanted It – You Got It!"
London Stock Exchange Faces Historic Low in Initial Public Offerings
A new online platform has emerged in the United Kingdom, specifically targeting Muslim men seeking virgin brides
Trump Celebrates Independence Day with B-2 Flyover and Signs Controversial Legislation
Boris Johnson Urges Conservatives to Ignore Farage
SNP Ordered to Update Single-Sex Space Guidance Within Days
Starmer Set to Reject Calls for Wealth Taxes
Stolen Century-Old Rolls-Royce Recovered After Hotel Theft
Macron Presses Starmer to Recognise Palestinian State
Labour Delayed Palestine Action Ban Over Riot Concerns
Swinney’s Tax Comments ‘Offensive to Scots’, Say Tories
High Street Retailers to Enforce Bans on Serial Shoplifters
Music Banned by Henry VIII to Be Performed After 500 Years
Steve Coogan Says Working Class Is Being ‘Ethnically Cleansed’
Home Office Admits Uncertainty Over Visa Overstayer Numbers
JD Vance Questions Mandelson Over Reform Party’s Rising Popularity
Macron to Receive Windsor Carriage Ride in Royal Gesture
Labour Accused of ‘Hammering’ Scots During First Year in Power
BBC Head of Music Stood Down Amid Bob Vylan Controversy
Corbyn Eyes Hard-Left Challenge to Starmer’s Leadership
London Tube Trains Suspended After Major Fire Erupts Nearby
Richard Kemp: I Felt Safer in Israel Under Attack Than in the UK
Cyclist Says Police Cited Human Rights Act for Riding No-Handed
China’s Central Bank Consults European Peers on Low-Rate Strategies
AI Raises Alarms Over Long-Term Job Security
Saudi Arabia Maintains Ties with Iran Despite Israel Conflict
Musk Battles to Protect Tesla Amid Trump Policy Threats
Air France-KLM Acquires Majority Stake in Scandinavian Airlines
UK Educators Sound Alarm on Declining Child Literacy
Shein Fined €40 Million in France Over Misleading Discounts
Brazil’s Lula Visits Kirchner During Argentina House Arrest
Trump Scores Legislative Win as House Passes Tax Reform Bill
Keir Starmer Faces Criticism After Rocky First Year in Power
DJI Launches Heavy-Duty Coaxial Quadcopter with 80 kg Lift Capacity
U.S. Senate Approves Major Legislation Dubbed the 'Big Beautiful Bill'
Largest Healthcare Fraud Takedown in U.S. History Announced by DOJ
×