The headline is right here from earlier;
Moody’s on the UK, says large, unfunded tax cuts a credit negative (who’dathunkit, eh?)
Farther from the Moody’s piece … dour studying this:
- Massive unfunded tax cuts will result in structurally larger deficits amid rising borrowing prices, a weaker development outlook and acute public spending stress stemming from the pandemic and a decade of austerity.
- A sustained confidence shock arising from market considerations over the credibility of the federal government’s fiscal technique that resulted in structurally larger funding prices may extra completely weaken the UK’s debt affordability.
- The federal government’s vitality worth cap will immediately cut back inflationary pressures within the close to time period. Nonetheless, we anticipate actual disposable incomes to say no this yr as a result of inflation, which we forecast will peak near 11% within the coming months, will stay elevated and above the central financial institution’s goal of two% till 2025.
- Massive unfunded fiscal stimulus – and better imported inflation if sterling’s depreciation persists – will immediate extra aggressive financial coverage tightening, weighing on development within the medium time period.
Moody’s accompany their piece with forecast revisions:
- revised our actual GDP development forecast to three.3% for 2022 from 3.0%
- lowered our forecast for 2023 to 0.3% from 0.9% beforehand
- we don’t anticipate development to return to its potential till 2026
GBP response to the funds announcement final week (last two candles, and I caught an RSI under for the LOLs … been ‘oversold’ for a loooooong time):
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