The international rating agency Fitch Ratings has confirmed the long-term issuer default rating (IDR) of the UK in foreign currency at "AA-", while worsening the outlook from stable to negative. The agency also confirmed the IDR of the Bank of England at "AA-", downgrading the forecast to negative.
"The rating of the UK reflects a highly profitable, diversified and flexible economy, a reliable basis for macroeconomic policy, developed capital markets and the status of the international reserve currency of the pound, which provides sufficient financial flexibility," the rating agency said.
Fitch lowered its forecast amid rising UK government debt and significant fiscal risks associated with weaker UK macroeconomic forecasts, mainly due to a serious energy shock.
Fitch said it expects government debt to rise to 107% of UK GDP by 2024 and stabilize at this level in the medium term. This is more than double the median 49% forecast for AA-rated sovereign issuers.