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Fitch is less pessimistic about the UK, raising the outlook to stable

Fitch is less pessimistic about the UK, raising the outlook to stable

Ratings agency Fitch was less pessimistic about the path of the United Kingdom's public finances on Friday, changing its outlook on long-term debt to stable from negative, indicating it no longer plans to cut it in the coming months.

The UK's long-term credit rating is maintained at AA-, a rating assigned to high-quality issuers. “Economic policy risks have eased since Fitch gave the UK's rating a negative outlook in October 2022, and we expect the government debt-to-GDP ratio to remain broadly stable from the end of 2025.”The company said in a press release.

Parliamentary elections are scheduled to be held in the United Kingdom by the end of 2024. The ruling Conservative Party is losing the election. “With uncertainty over the UK's fiscal strategy following the election, Fitch's cautious forecasts balance policy priorities with reducing risks to the sustainability of public finances.”Also clarified.

Inflation fell to 3.4% year-on-year in February, more than expected. Although it has fallen significantly from a peak of more than 11% at the end of 2022, now “Lowest from September 2021”, which is the highest among the G7 countries, and still above the Bank of England's (BoE) target of 2%. The British economy, which fell into recession at the end of 2023, regained momentum in January with growth of 0.2% in a month driven by trade and construction.

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