New York, United States— Fitch on Wednesday lowered the outlook for its credit rating for British government debt from stable to negative after new Prime Minister Liz Truss announced a crash program of debt-fueled tax cuts.
“The large and unfunded fiscal package announced as part of the new government’s growth plan could lead to a significant increase in fiscal deficits over the medium term,” Fitch said in a statement.
“We consider that statements by the Chancellor (finance minister) hinting at the possibility of additional tax cuts and the likely modification of fiscal rules legislated in January reduce the predictability of fiscal policy.”
Truss on Wednesday vowed to steer Britain towards growth as she closed her ruling Conservative party’s tumultuous annual conference.
Just a month since she succeeded Boris Johnson, Truss has alienated voters, financial markets and many of her own lawmakers.
But she argued in her speech that the status quo was not an option, despite the botched rollout of her fiscal plan leading to a humiliating U-turn on a pledge to cut income tax for the highest earners.
The failure to flesh out her economic plan failed to calm the jittery markets, however, and the pound slid 2.01 percent against the dollar, falling to as low as $1.1241 after her address.