Moody's flags Oct 21 as crucial date for UK rating

# 29 September 2022 20:54 (UTC +04:00)

Moody's top European analyst has flagged Oct. 21 as the next crucial date for Britain's credit rating following the firm's negative assessment this week of the government's new debt-fuelled spending plans, APA reports citing Reuters.

Rating firms set out when they intend to review European governments' creditworthiness before the start of each year and by coincidence both Moody's and S&P Global have scheduled Oct. 21 as their next UK dates.

Moody's described the UK's plans for sweeping tax cuts this week as "negative" for Britain's creditworthiness but stopped short of actually changing the rating's 'outlook' to negative as it did with Italy recently, a move that was also taken on the scheduled calendar date.

"In our normal course of business, that (Oct. 21) would be the point at which we would normally expect to update the market," Moody's Chief EMEA Credit Officer Colin Ellis told Reuters when asked whether it had considered cutting the UK's Aa3 rating this week.

"The decision that we will have to take and the discussion we will have... is whether these actions are negative enough to warrant a rating action. And what form, if any, that rating action should take."

Moody's already rates the UK one rung lower than France despite a lower debt-to-GDP level. Its UK score is also lower than S&P's equivalent AA although it is in line with Fitch's AA-.

It estimates 72 billion pounds of additional spending in the UK's new plans will keep the budget deficit above 6% of gross domestic product (GDP) over the next two years and lift the debt-to-GDP ratio to 104% from 100% by 2026.