United Kingdom of Great Britain and Northern Ireland Surveillance Report

Table of Contents

Ratings

Executive Summary

Ratings Outlook

Key Credit Considerations

Large, Wealthy and Resilient Economy

Very Strong Financing Flexibility

Globally Important Financial Centre

High Sensitivity to Inflation

Fiscal Consolidation Remains Challenging

Brexit and External Vulnerabilities Constrain Growth

Rating Sensitivities

K-Sov and Rating Methodology Steps

Macroeconomic Credit Metrics

Step I: K-Sov Scorecard Analysis

Macroeconomic Performance

Structural Headwinds Weigh on the Medium-Term Outlook

Persistent Inflation and an Incomplete Labour Market Rebalancing

Government Financial Strength

Challenging Period Ahead for Government Finances

Debt Structure Provides Flexibility, but Inflation Sensitivities Persist

External Vulnerability

Brexit Hampers Trade While Current Account Dynamics Reveal UK Vulnerabilities

Structural Robustness

Renewed Political Transition Raises Policy Uncertainty

Resilient Banking Sector Amid Evolving Interest Rate Environment and External Volatility

Step II: Peer Comparatives, Trends, Willingness to Pay

Macroeconomic Forecasts

Comparative Statistics

Step III: Local Currency vs. Foreign Currency Government Bond Ratings

Conclusion

Disclosures

Related Publications

Executive Summary

KBRA affirms the long-term and short-term issuer ratings of the United Kingdom of Great Britain and Northern Ireland (UK). The Outlook on the long-term ratings is Stable.

Ratings Outlook

The Outlook reflects expectations for gradual fiscal consolidation and eventual debt stabilisation, balanced against continued challenges from elevated borrowing costs, limited fiscal headroom, subdued growth, and persistent inflationary pressures. While these factors leave the fiscal trajectory vulnerable to shocks and could slow the pace of improvement, the UK’s large and advanced economy, strong institutions, deep capital markets, and substantial financing flexibility continue to provide important support to the ratings.

Key Credit Considerations

The ratings were affirmed because of the following key credit considerations:

Large, Wealthy and Resilient Economy

The UK is a large, wealthy, and resilient G7 economy with a diversified economic base, high-quality institutions, and a flexible…

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