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Analysts say the outlook for Britain’s public finances had “weakened significantly” with Brexit likely to put further pressure  on the country’s economic strength.
Analysts say the outlook for Britain’s public finances had “weakened significantly” with Brexit likely to put further pressure  on the country’s economic strength.

Moody’s Downgrades Britain Debt Rating

Moody’s says it is no longer confident that the UK government will be able to secure a replacement to free trade agreement with the EU

Moody’s Downgrades Britain Debt Rating

Moody's cut Britain's long-term credit rating Friday, citing economic uncertainty sparked by complex Brexit negotiations and the likelihood of weaker public finances.
The ratings agency cut the debt grade one notch to Aa2 from Aa1 with a stable outlook, which reflects expectations Britain's debt will "continue to rise", and worries that whatever trade agreement is reached with the European Union, even a "best-case scenario would not award the same access to the EU... that the UK currently enjoys," AFP reported.
Moody's predicted "weaker public finances going forward" as the government boosts welfare spending after several years of cuts and Prime Minister Theresa May's parliamentary coalition faces pressure to make good on promises to boost spending for Northern Ireland.
The ratings agency also expects Brexit and the loss of access to the single market to weigh on growth, saying it is "no longer confident that the UK government will be able to secure a replacement to free trade agreement with the EU which substantially mitigates the negative economic impact of Brexit."
The downgrade came hours after May, in a major address in Italy, vowed that Britain would largely maintain its current ties with Brussels ahead of a fourth round of negotiations with the European Commission next week.
The pound fell on the speech, which critics said did too little to clarify matters.
"Overall, there was very little detail or progress in this speech, with a risk of continued uncertainty among businesses and investors," Barclays said in a note.
"Any continued delay in next week's negotiations may in turn dampen sentiment and the future investment and growth outlook."
Moody's claimed plans to leave the EU had sparked economic certainty at a time when the government’s debt reduction plans appeared to have run off course, the BBC reported.
Analysts said the outlook for the UK’s public finances had “weakened significantly” with Brexit likely to put further pressure on the country’s economic strength.

Two-Year Transition Period
May said the UK would honor its financial commitments to the European Union’s current budget and seek to keep trading with the bloc on current terms for a two-year period after its planned exit in 2019, in a speech aimed at revitalizing stalled divorce talks with the EU, Dow Jones reported.
In a grand hall overlooking Florence’s famed Church of Santa Maria Novella, May appealed for creativity and ambition from negotiators working to untangle the UK’s four-decade ties to the EU and craft a new partnership built on economic and security cooperation.
Britain’s exit from the EU, scheduled for March 2019, “does not mean we are turning our back on Europe, or worse that we do not wish the EU to succeed,” May said, in an address that comes ahead of the resumption of exit talks between London and Brussels on Monday.
Those talks have made only limited progress since they began in the summer and remain focused on three key issues: EU citizens’ rights after Brexit, managing the Irish border with Britain, and reaching a deal on the UK’s financial commitments to the EU that haven’t yet been paid.
She pledged that the UK would honor financial commitments to the bloc made during its membership.
“I do not want our partners to fear that they will need to pay more or receive less over the remainder of the current budget plan as a result of our decision to leave,” May said. The current EU budget plan runs from 2014 to 2020.
A senior EU official said that if the budget offer were to be put on paper, it might advance talks next week. “But it’s not enough for sufficient progress, that’s still a long way to go,” the official said.
May also suggested a two-year “implementation period” would be needed after the UK’s planned withdrawal in 2019 for both sides to prepare for new trading relations. She said that during this time, “access to one another’s markets should continue on current terms,” though she added the UK wants to be free during the transition to seek new trade deals.

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