The UK’s credit rating could be downgraded by rating agency Moody’s, according to a rating issued on Friday.

The UK is currently rated Aa2 – the third-highest grade for sovereign debt. The rating agency changed the outlook on its Aa2 from “stable” to “negative” that implies a cut to the actual rating is imminent.

Aa2 is at par with France but below Germany’s AAA rating. The UK has lost its top AAA credit rating for the first time since 1978 in 2013.

Both the ruling Conservatives and the Labour opposition are campaigning on a fiscally expansionist program. In its statement, the rating agency concludes that “in the current political climate, Moody’s sees no meaningful pressure for debt-reducing fiscal policies.”

According to Moody’s, the UK’s £1.8trn public debt – more than 80% of its GDP – is likely to surge while the economy is “more susceptible to shocks than previously assumed”.

The last UK rating downgrade in 2017 had little impact on the cost of borrowing but further downgrade could be significant. For the moment, British government borrowing costs are close to record lows given the context of an economic slowdown and the reduction of interest rates by all developed economies.

A BMG opinion poll (November 5-8) suggests the Conservatives are leading the race with 37% — compared to 31% in October) while Labour has seen their support decline from 29% to 26% and the Liberal Democrats have seen their support from 20% to 16%. Separate polls for the Mail on Sunday and Observer put the Conservatives on 41% and Labour on 29%, while a Sunday Times poll put the Conservatives on 39% and Labour on 26%.

The prospect of a political stalemate could prove as damaging to the economy as a fiscally expansionist policy, reducing the ability of the government to respond to changing circumstances.