Ratings agency Moody’s said yesterday that the UK government’s moves to address budget challenges were timely and positive steps aimed at tackling declining public finances amid a worrisome fiscal outlook.
British Finance Minister Rachel Reeves, on Wednesday, rebuilt the fiscal buffer against which the government measures its fiscal rules, partly by cutting welfare payments.
“There is a significant risk that the Chancellor will have to cut spending further or introduce new revenue-raising measures in the next budget in October,” Moody’s said in response to Reeves’ Spring Statement.
Economists also suggest that economic growth is likely to remain weak, raising the possibility that Reeves may be forced to raise taxes again in her annual budget later this year to stabilise public finances — potentially diverging from her Labour government’s manifesto pledges. According to Moody’s, overall, the Spring Statement’s measures do not change its assessment of the UK’s credit quality or the challenges of fiscal consolidation, nor do they significantly alter its expectations of persistently high public debt
