Moody's prediction for the U.K. was lowered due to political shocks

On Friday, the prediction on the U.K. growth prospects and the inflation reduction decreased. Moody's agency downgraded the U.K. rating from "stable" to "negative". The reasons were continuing political turbulence, weaker growth prospects and high inflation.

The Moody's report says that there are risks to the availability of UK debt due to possible increase in borrowing and the risk of decrease in the stability of policy trust. Also, according to the agency, there was "increased unpredictability in policy because of weaker growth prospects and high inflation".

On September 23, former finance minister Kwasi Kwarteng announced about a permanent, unfunded tax cut amounting to about 45 billion pounds. Also, he announced a costly plan to limit energy tariffs for households and businesses.

This announcement caused the sterling and bond markets to fall. Likewise, it caused a political crisis, resulting in Truss's decision to resign Kwarteng and cancel almost all planned tax cuts. Then Truss announced her resignation.

The new finance minister, Jeremy Hunt, said he would do "whatever it takes" to restore confidence in British public finances. On October 31 he is expected to announce a plan for reducing public debt as a part of economic production over the medium term.