Ratings agency Moody's on Friday lowered the United Kingdom's outlook to "negative" from "stable" over ongoing political turmoil, weaker growth prospects and high inflation.
Moody's maintained its sovereign rating for the United Kingdom at "Aa3."
British Prime Minister Liz Truss resigned on Thursday, triggering a leadership contest that is coming so soon after the bitter one that put her into power. That could deepen divisions in the governing Conservative party.
There was "heightened unpredictability in policymaking amid weaker growth prospects and high inflation," Moody's said. The report said there was also "risks to the UK's debt affordability from likely higher borrowing and risk of a sustained weakening in policy credibility".
Former finance minister Kwasi Kwarteng announced around 45 billion poundsof permanent, unfunded tax cuts on September 23, alongside an expensive plan to cap energy tariffs for households and businesses.
The move sent sterling and bond markets into a tailspin and triggered a political crisis that led to Truss firing Kwarteng, reversing almost all the planned tax cutsand then announcing her own resignation.
New finance minister Jeremy Hunt says he will do "whatever it takes" to restore confidence in Britain's public finances. He is due to announce a plan on October 31 aimed at bringing down public debt as a share of economic output in the medium term.
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