Belfast Telegraph

Inconclusive election 'to hit credit rating of UK'

The United Kingdom's credit rating is at risk of being downgraded after last week's "inconclusive" general election result, Moody's has warned.

The ratings agency said a hung parliament "heightens uncertainty over Brexit negotiations and increases fiscal risks", hurting Britain's creditworthiness.

Kathrin Muehlbronner, senior vice president at Moody's, said the election result "will complicate and probably delay Brexit negotiations, a credit negative".

While the negotiations with the EU were due to begin on June 19, Ms Muehlbronner argued: "We now expect a delay to the start of those negotiations or at least a period during which no substantive issues will be discussed."

She pointed out the deadline for the UK to leave the EU in March 2019 is fixed, and therefore any delay to the start of talks will further reduce the time available to strike a transition deal to avoid a "cliff edge" Brexit.

The agency also warned the UK's attempts to shrink its budget deficit could be undermined by the election result, in a further hit to the country's creditworthiness.

The Labour Party, which made significant gains in the general election, campaigned on a strong anti-austerity platform.

Moody's said this could mean increased public spending under a hung parliament.

With the UK economy slowing, any fiscal loosening would increase the country's debt problem.

Belfast Telegraph