(MENAFN) Worldwide rating agency Moody's on Wednesday issued a warning declaration on the UK administration's newly revealed mini-budget, stating that the large and unfunded tax cuts in it could cause higher shortfalls amid high borrowing prices and a weaker expansion point of view.
"A sustained confidence shock arising from market concerns over the credibility of the government's fiscal strategy that resulted in structurally higher funding costs could more permanently weaken the UK's debt affordability," as stated by Moody's.
It emphasized that while an "energy price cap" initiated by the government earlier this month would "directly reduce inflationary pressures in the near term," real disposable profits could drop in 2022 because of inflation, continuing "elevated and above the central bank's target of 2 percent until 2025."
Moody's predictions inflation to peak at nearly 11 percent in the next months.
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