Fitch lowers the UK credit outlook to negative

Fitch Ratings has lowered the UK's credit outlook to negative from stable, citing the risk of widening the country's budget deficit due to the government's new plan.

According to a statement by Fitch, the agency has confirmed the UK has an AA- rating. The credit outlook was downgraded from "stable" to "negative".

According to analysts Erich Arispe Morales and Greg Kiss, a large fiscal stimulus announced without countervailing measures or an independent assessment of the impact on macroeconomics and public finances, as well as inconsistency between the position of monetary and fiscal policy, given the strong inflationary pressures, have in the Fitch view, a negative affect on financial markets.

The UK's most radical tax cut since 1972, coupled with large-scale borrowing plans, made British Banks worried as the pound hit its lowest level against the dollar and interest rates soared. The Bank of England stepped in to avert an imminent stock market crash by promising unlimited purchases of long-term bonds.

In addition, S&P Global Ratings lowered its forecast for the UK last week due to risks to the country's financial condition. Moody's also warned the UK government that the new low budget risked increasing the UK public debt.