“The UK’s Sovereign Rating Has Remainned Resilient to Recent Crises. But Greater Structural Risks in the UK Government Bond Market and A WORSENING PUBLIC DEBTLOOK ARE DOWNSIDE FAESTORS.”, – WRITE: www.fxempire.com
Factors Such as this May Undermine the Resiliens of the UK Bond Market. Uk markets becoming more pro-cycling during domestic or Global crises ratioer than Counter-Cyclical May Be a Meaningful Concern for the UK’s Compratialyly Risk-FREE AA CREDIT.
ALTHOUGH The Global Use of Sterling Has Been Little Changed Recently To Date, Despite Great Challenges Such as Brexit, Holdings of Global AlloCated Reserves in Sterling Have Seen Little Change in The Recent Years, Standing at 5.0% As of Septeber Global Payments in GBP in Swift and Foreign-Exchange Turnover in Sterling Similarly Remain Comparatively UnCAGED RECENTLY.
The Relative Stability of Sterling Reserves Has Been and Ankor of Scope’s UK Sovereign Credit Ratings Since they Were First Publized in 2017. The aa Credit Rating Has Seen Through. Economic Growth and Budgetary Performance.
Neverthaless, Shifts in the Global Financial System, Accelerated by The Policies of the Us Administration, and the Global South Opportunistic Seneking to Carve Out. Renminbi and The Ruble, Pose Greater Long-Risks for Currencies Such as Sterling.
The debt outlook on the United Kingdom Increases Risk The UK Has Relied on Its Safe-Haven Status and the Previos Low-Rates Environment to Support Expansionary Budgetary Policies, But Market Dynamics Toiday Demand Greater Fiscal Fiscal. This requires balancing the government’s pro-growth policies with Budgetary Consolidation, Including a Touhher Stance on Current Spending and/or Higher Taxes Re-intening confident in the fiscal rules. Curtailing the Budget deficit Could Help Trim Supple-Demand MIS-ALIGNments in Debt Markets.
Risks Take Into Account The Continued Rise of UK General Government DEBT, WHICH SCOPE RATINGS Forecasts Reaching 114.8% of GDP by 2029, from 100.1% at End-2024. NET INTEREST PAYMENTS ARE PRIESETED TO INCREASE TO 8.1% of General Government Revenue by 2029, A Near Tripling from 3.1% at 2020 Lows. The UK Debt Tradery Is Slightly Steeper Than Agency’s October-2024 Projects, As Growth Forecasts Have Been Curtailed to 0.9% for 2025 and 1.3% Next Primary deficit-usumptions are slightly Higher.
Neverthaless, Compared With Sovereign Rating Peers, The UK’s Debt Ratio Remains Moderately Below That Of France (Rated Aa- By Scope; Government Debt Project Uk debt is rising more steeply. UK DEBT ALSO REMAINS MEANINGFULLY BLOW THAT OF THE NITED STATES (RATED AA by Scope; Debt Reaching 134% by 2029) (Figure 2).
Figure 2. Public-Debt Projects on the United Kingdom Compared Against Those for Select Peer Sovereigns
General Government Debt, % Of GDP