October 21 is an extremely important day for the British market in the midst of a storm. This day,S & P and Moody's Corporation, two of the world's top three rating agencies, will re-evaluate the UK government's credit rating.

It is customary for rating agencies to set a time to assess the credibility of European governments by the beginning of each year, and coincidentally, both Moody's Corporation and S & P have set October 21 as the date for their next evaluation of the UK government.

For Britain, it is already full of rain and rain.

Moody's Corporation has labeled the UK government's biggest tax cut in 50 years as a "negative" assessment, saying the move will threaten Britain's credibility in the eyes of investors, but Moody's Corporation has not downgraded the UK's rating outlook to negative.

S & P is one step ahead.Although the UK's AA/A-1+ sovereign rating was maintained on Friday, the outlook for the rating was lowered from "stable" to "negative".

S & P said that after the tax cuts were announced, the UK fiscal deficit would increase and the risk of fiscal imbalances would increase.

Now there will be "additional risks" in providing debt financing to the UK.

At present, Moody's Corporation has a sovereign rating of Aa3 on the UK, while Fitch has the same rating of AA-, while S & P has a credit rating of AA, one notch higher than Moody's Corporation and Fitch.

Earlier, aggressive tax cuts triggered a major earthquake in Britain's capital markets.The collapse of the pound hit an all-time low and gilts staged a "big crash". Wild fluctuations made British pensions the first victim, and the Bank of England had to bail out the market in order to avoid a bigger crisis.

This also put the new Truss government in an awkward position, and some media even pointed out that Truss's insistence on implementing the plan may lead to her stepping down early before Britain's next general election.

S & P estimates that if the new policy continues, the UK government's budget deficit will increase by 2.6 percentage points as a share of GDP by 2025, making it difficult for the authorities to achieve their ambitions to reduce public debt as a share of national income.

According to S & P's forecast, the UK government's net general debt as a share of GDP will decline from 2023.

S & P believes the UK economy will contract in the coming quarters, with GDP falling by 0.5 per cent next year.

It is not clear whether the UK government's promise to reduce debt by cutting public spending will be fulfilled, and whether it will be enough to put debt back on track. This will be particularly difficult against a backdrop of a weak global economy, rising interest rates hitting the property market and shaky consumer confidence. "

S & P also mentionedA credit rating downgrade would put pressure on Britain's foreign debt and could affect the economic outlook. If fiscal conditions remain tight, Britain's sovereign credit rating could be downgraded.

Moody's Corporation also lowered the UK's GDP growth forecast for 2023 from 0.9% to 0.3%, and does not expect UK economic growth to return to its potential level until 2026.

Moody's Corporation said:

Concerns about the credibility of the government's fiscal strategy have triggered a continuing shock of confidence, which will lead to higher structural financing costs and could permanently weaken the UK's debt affordability.

Before the two big rating agencies, the IMF had rarely "lambasted" the UK tax cuts and urged the UK to "re-evaluate" the tax cuts.

IMF said in a statement:

Given that many countries, including the UK, are facing rising inflationary pressures, we do not recommend large-scale and untargeted fiscal plans at this critical moment. The point is that fiscal policy cannot run counter to monetary policy.