Rating revised

Fitch upgrade shows ‘economy turning corner’

Jeremy Hunt (Treasury)
Jeremy Hunt: growth outperforming expectations (pic: Treasury)

Chancellor Jeremy Hunt said an upward revision of UK government debt by credit rating agency Fitch shows the economy is turning a corner. 

Fitch said it had upgraded its rating from “negative” to “stable”, saying economic policy risks had eased since it issued its “negative” outlook in October 2022, during the brief premiership of former Conservative prime minister Liz Truss.

The US ratings agency’s decision to reaffirm the country’s AA- rating was seen as a welcome endorsement of the UK government’s attempts to kickstart the economy and resistance to raising more debt.

Mr Hunt said in a statement on Friday night: “This shows that the economy is turning a corner. Inflation is down from over 11% to 3.4%, debt is on track to fall, and growth has outperformed expectations.

“This means we have been able to cut taxes by £900 for the average worker, while protecting public services including through billions of extra funding for the NHS.” 

The Truss government’s unsupported tax-slashing mini-budget sparked economic and political turmoil and led to her departure after just 49 days in Downing Street.

Fitch said: “We expect general government debt/GDP to be broadly stable from end-2025,” adding it expects the UK’s government deficit to fall from 5.8% of GDP last year to 3.7% in 2025.

It also welcomed the recent fall in UK annual consumer inflation, which has plummeted from a peak of 11.1% in October 2022 to 3.4% in February this year.

“Inflation had decelerated markedly due to lower energy prices, but core and services inflation remains relatively high, partly reflecting a still tight labour market,” Fitch said.

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