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UK: Fitch downgrades outlook to ‘negative’

London’s reversal on the taxation of the highest incomes will not have been enough. On Wednesday, October 5, following the move orchestrated by S&P, rating agency Fitch lowered the outlook for its UK rating from “stable” to “negative”, Le Figaro specifies. Again and again at the heart of the concerns, the plan from Liz Truss and her Chancellor of the Exchequer Kwasi Kwarteng, who are promoting large unfunded tax cuts in an attempt to shock competition while rolling out massive energy support for households. A figure of between £100 and £200 billion has been put forward by economists.

“Gap”. These measures “could lead to a significant increase in budget deficits in the medium term,” notes Fitch. In particular, the institution criticizes a policy “announced without compensatory measures or independent evaluation of its impact on public finances”, while noting “the inconsistency between fiscal and monetary policy given the strong inflationary pressure”.

Indeed, the UK director’s announcement sent a wave of panic through the markets. On September 26, the pound even fell to its lowest ever; as for the long-term public interest rates, they have risen sharply. And this while London, already hit by the post-Brexit landing and Covid, needs to borrow. Moody’s and the International Monetary Fund, for their part, have openly expressed concern about the piloting of 10 Downing Street. On Wednesday 5 October Lizz Truss declared herself “ready to make tough choices” and asked the Conservative Party to trust her



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