Shawdesh Desk:

The UK’s economic outlook has been lowered to “negative” by ratings agency Moody’s due to political instability and high inflation.

Moody’s changed the UK’s outlook – which is a marker of how likely it is to pay back debts – from “stable”.

Rating agencies, in essence, rate a country on the strength of its economy.

Moody’s along with another of the big credit rating agencies Standard & Poor’s (S&P) maintained their assessments of the UK’s credit rating.

Rating agencies give governments (or large companies) a score on how likely they are to pay back their debt.

The rating affects how much it costs governments to borrow money in the international financial markets. In theory, a high credit rating means a lower interest rate (and vice versa).

Each agency gives countries around the world a specific credit rating score. These range from a top mark of “AAA”, which stands for “prime”, down to the lowest reading of “D”, which stands for “in default”.

Moody’s said there were “risks to the UK’s debt affordability”, but kept its rating of Aa3, the fourth-highest level on its scale.

Meanwhile, S&P maintained the UK’s rating of AA – its third highest rating level – and maintained its previously-changed outlook from stable to negative.

The reports published on Friday do not mean the UK’s credit rating has been downgraded, but a negative outlook indicates it could be downgraded at a later date. The other outlooks countries can be given are positive, or stable, and any outlook period typically lasts 12 to 18 months.