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Europe, News

Moody’s cuts UK’s debt rating on weak economic growth

(Adds background, details from press release)

Oct 16 (Reuters) – Ratings agency Moody’s lowered the United Kingdom’s sovereign debt rating by one notch to “Aa3” from “Aa2” on Friday, citing weakening economic and fiscal strength stemming from Brexit woes and coronavirus-induced shocks.

The Johnson government has tightened restrictions as the country grapples with a second wave of COVID-19 infections, with the stricter measures heaping more pressure on an economy already weighed down by Brexit uncertainties.

“Even if there is a trade deal between the UK and EU by the end of 2020, it will likely be narrow in scope and therefore the UK’s exit from the EU will, in Moody’s view, continue to put downward pressure on private investment and economic growth,” the agency said.

The rating change comes as Prime Minister Boris Johnson said on Friday that the UK should get ready for a no-deal Brexit outcome, but stopped short of announcing that the country would exit the trade talks.

The agency revised the outlook on the country’s sovereign debt to “stable” from “negative”, reflecting its expectation that the UK’s debt would likely stabilize.

(Reporting by Aditi Sebastian; Editing by Devika Syamnath)

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