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A leading credit rating agency has revised down its outlook for the UK economy due to concerns about its significant debt burden. Standard and Poor's downgraded its view of the UK to "negative" from "stable" for the first time since it started analysing its public finances in 1978. It said the UK's finances were deteriorating faster than expected. The change came as data confirmed that new government borrowing has soared, to a record of almost £8.5bn in April.
Government coffers have been hit by higher social benefits payments and lower tax receipts as unemployment has risen and businesses have closed or reduced output.
UK deflation moved into record territory last month, official figures showed today. The headline Retail Prices Index (RPI) fell from minus 0.4% to minus 1.2% in April, the Office for National Statistics (ONS) said.
The RPI turned negative for the first time in almost 50 years in March and is now below the all-time low of minus 0. ADVERTISEMENT 8% recorded in June 1959. ONS records began in 1948. The fall reflects lower mortgage interest payments and house prices as well as recent cuts in gas and electricity bills.
The Consumer Prices Index (CPI), which does not include mortgage and house prices and is used by the Bank of England to target inflation, fell from 2.9% to 2.3% in April, the lowest since January last year. The RPI's move downwards follows the Bank of England's interest rate cut to an all-time low of 0.5% in March, bringing reduced mortgage payments for many households.