Fitch downgraded the country by one notch to ‘AA-‘ – the same level as its rating for Belgium and the Czech Republic – from ‘AA’ and said a further cut could follow as it kept the rating on negative outlook.
“The downgrade reflects a significant weakening of the UK’s public finances caused by the impact of the COVID-19 outbreak and a fiscal loosening stance that was instigated before the scale of the crisis became apparent,” Fitch said.
“The downgrade also reflects the deep near-term damage to the UK economy caused by the coronavirus outbreak and the lingering uncertainty regarding the post-Brexit UK-EU trade relationship.”
Facing what some economists say could be Britain’s deepest recession in a century after the government ordered many businesses to close to slow the spread of coronavirus, finance minister Rishi Sunak has announced a string of stimulus measures to try to prevent a surge in unemployment.
“We have taken unprecedented action to support people, businesses and our vital public services through this crisis. These are the right steps to protect our economy against lasting damage,” a spokesman for the Treasury said on Saturday in response to the Fitch rating cut.
