Ratings agency Moody’s on Friday lowered the United Kingdom’s outlook to “negative” from “stable” over ongoing political turmoil, weaker growth prospects and high inflation.

Moody’s maintained its sovereign rating for the United Kingdom at “Aa3”.

British Prime Minister Liz Truss resigned on Thursday triggering a leadership contest that, coming so soon after the bitter one that put her into power, could deepen divisions in the governing Conservative party.

There was “heightened unpredictability in policymaking amid weaker growth prospects and high inflation,” Moody’s said. The report said there was also “risks to the UK’s debt affordability from likely higher borrowing and risk of a sustained weakening in policy credibility”.

Former finance minister Kwasi Kwarteng announced around 45 billion pounds of permanent, unfunded tax cuts on Sept. 23 alongside an expensive plan to cap energy tariffs for household and businesses.

The move sent sterling and bond markets into a tailspin and triggered a political crisis that led to Truss firing Kwarteng, reversing almost all the planned tax cuts and then announcing her own resignation.

New finance minister Jeremy Hunt says he will do “whatever it takes” to restore confidence in Britain’s public finances. He is due to announce a plan on Oct. 31 aimed at bringing down public debt as a share of economic output in the medium term.

Meanwhile, UK government borrowing surged and retail sales slumped in September, official data showed Friday, dealing a further economic blow to a country in political crisis.

Public sector net borrowing stood at £20 billion ($22 billion), the second-largest September level on record, as decades-high inflation sees interest on debt repayments balloon.

Retail sales volumes tumbled 1.4 percent as sky-high prices curbed consumer purchasing. The figure was better, however, than the 1.7-percent slide in August.

The data comes one day after Prime Minister Liz Truss resigned in the wake of markets turmoil triggered by her budget of tax cuts funded by debt.

The public borrowing figure exceeded analysts’ consensus of £17.2 billion, which was already far above the government’s own prediction.

“The weakness in retail sales and further overshoot of the... (government) public borrowing forecast won’t make the next prime minister’s task any easier in navigating the economy through” various crises, concluded Ruth Gregory, senior UK economist at Capital Economics.

Interest payments on government debt surged to £7.7 billion in September, “largely reflecting the broader economic environment of soaring inflation”, noted CEBR economist Pushpin Singh.

Government borrowing is linked to the wider RPI measure of inflation, which stands at a huge 12.6 percent in Britain.

Global stocks wavered on Friday on renewed concerns about rising interest rates while the British pound slumped over the UK’s political drama.European stocks fell while Wall Street went from red to green after the open as investors weighed fresh company earnings and rising bond yields.

“It’s not a good look right now in sovereign bond markets and that is making things look less pretty in global equity markets,” said Briefing.com analyst Patrick O’Hare.

Sterling slid beneath $1.12 after having bounced above $1.13 Thursday following the resignation of Prime Minister Liz Truss.

The yield on the British government’s 30-year bond, or gilt, climbed back above four percent on Friday as the Conservatives’ race to replace Truss went into full swing, with her divisive predecessor Boris Johnson among the potential contenders.

The dollar also strengthened further against the yen as the US central bank is expected to pursue its aggressive rate hikes while its Japanese counterpart continues its dovish stance.

The dollar surged almost one percent to 151.53 yen.

The yield on the 10-year US Treasury bill -- the interest the government pays to borrow -- has surged well past four percent.

Bond yields for governments in France and Germany also rose.

“There is still huge uncertainty over the economy, inflation and where interest rates will end up and none of that is conducive to a strong sustainable stock market recovery,” said Craig Erlam, senior market analyst at trading platform OANDA.

Analysts said investors were also tracking third-quarter earnings reports from American Express and Verizon Communications.

“The situation in the UK looks particularly bleak,” Erlam said.

“I’m not sure anyone is particularly confident that we’re suddenly going to see stability in government,” he said.

Truss resigned after 44 days in office, having triggered markets chaos over a tax-cutting budget due to have been funded by debt.

The pound was weighed down Friday additionally by official data showing that UK borrowing surged and retail sales slumped in September.