Moody’s lowered the credit ratings of British lenders

Moody’s expressed concern about the banking sector.

The credit rating agency, which advises investors on the likelihood that companies will be able to repay their debt, said it was downgrading its outlook on a number of lenders from “stable” to “negative”.

Such a move often makes it more expensive for lenders to raise money from investors when they need it. Barclays, Santander UK, HSBC, Lloyds Bank and Natwest were downgraded.

A Moody’s spokesman said: “This action reflects the government’s potentially weak ability to support the nation’s systemic banks.”

Normally, Moody’s assumes that if a bank reaches its buffers, it will receive some support from the Treasury. But now the prospects for the national debt have weakened, as have the banks.

Last Friday, it changed its outlook on public debt to negative due to “increased unpredictability in policymaking amid weaker growth prospects and high inflation.”

There were also risks that a whopping £2.4 trillion could become unavailable due to “likely higher borrowing and the risk of a sustained weakening of policy confidence”.

Moody’s took similar action against Germany’s banking sector in 2019, when lenders’ profitability and creditworthiness weakened amid low interest rates.