The UK’s credit rating came under further threat on Wednesday as Fitch put the country on a “negative” outlook while giving a damning verdict on the government’s fiscal policy and political credibility.

The rating agency maintained the UK’s AA- investment grade but warned that the outlook was now negative rather than stable, mirroring the action taken last week by its peer S&P.

Fitch said the large, unfunded tax cuts announced as part of the government’s mini-Budget — without any independent evaluation of their impact — could lead to a significant increase in deficits in the medium term, while creating an immediate tension between monetary and fiscal policy given high inflation. This had hit market confidence and the credibility of the policy framework.