Moody's Downgrades UK Rating to 'Aa3'

Moody's downgraded the UK's debt rating on Friday due to the massive economic blow from the pandemic, Brexit and the lack of a clear budget policy from the current government.

The rating agency downgraded the rating from "Aa2" to "Aa3" , placing Britain on par with the Czech Republic and Belgium. Fitch also downgraded the UK's credit rating, while S&P rank was higher.

Exceeding 100% of gross domestic product (GDP), UK, the sixth largest global economy contracted most among the G7 countries in the second quarter of 2020, with a public debt of more than £ 2 trillion.

UK has faced a sharp contraction from peak compared to other G20 economies due to the drastic impact outbreak of the COVID-19, which forced social distancing rules that slowed the service sector.

Moody's said Britain's growth was "significantly weaker than expected and is likely to remain so in the future."

The downgrade is blow to the current government, which has come under fire from opposition parties for the death toll figures that is higher than anywhere else in Europe.

Moreover, Moody's said that the failure of the United Kingdom to reach a trade deal with the European Union (EU) before Brexit would double the economic damage of the pandemic.

Johnson said earlier on Friday that there was no point at present in continuing trade negotiations.

Moody's said: "Even if there is a Brexit trade deal by the end of 2020, it is likely to be narrow in scope," adding that Britain has lost budget discipline, fiscal policy, and its high debt levels are unlikely to decline soon.

Britain should cut spending to contain debt level, however the government responded that it has no choice but to increase spending to mitigate the impact of the pandemic.

As for the country's sovereign debt, Moody's revised the outlook  to "stable" from "negative".