A worldwide economic slowdown will add fuel to the rise of populism and anti-globalisation movements in 2019, according to credit ratings agency Moody’s.

The agency has offered a bleak outlook for next year up to 2020. It expects softening economic growth, higher borrowing costs, and an uptick in market volatility.

This negative prediction is largely due to increased domestic and geopolitical tensions. These presented the single greatest threat to credit markets.

As income inequality worsens, particularly in the US it could “ratchet up political polarisation”. This would make sudden policies changes more likely, and fuel market volatility.

“The shift toward populism and nationalism has led to pockets of heightened political risk in several countries and could spread,” it added. Risks to prosperity will build throughout the next year, and countries will face “even weaker [credit] conditions in 2020,” the agency said in its 2019 Global Credit report.

Global growth was predicted to slow to 2.9pc next year, down from 3.3pc in both 2018 and 2017. The slowdown will be driven by a reversal of monetary policies introduced in the wake of the financial crisis a decade ago Moody’s said.

This tightening of liquidity will come as the trade war between the world’s two largest economies, the US and China, gathers pace. Funding for businesses will also become costlier just as tighter labour markets means it becomes more expensive to hire staff.

Emerging markets will face “divergent conditions” according to Moody’s. It predicts “robust growth” for India and Indonesia but “recession-inducing credit constraints” for Argentina and Turkey. Both South Africa and Brazil will see only sluggish growth.

Major economies would also chart very different monetary policy paths, thanks to the trade war.

The US Federal Reserve will continue with its course of rate hikes, and while other major central banks are set to follow its lead, China is likely to pursue monetary easing, in order to “offset” the toll of the trade war.

Higher inflation in the US and and a broad slowdown in China, could both undermine risk appetites and cause “sharp adjustments in financial Markets”, Moody’s warned.

As inflationary pressures lead to interest rate rises, the UK could be exposed, PwC warned in a separate assessment of debt accumulation.

UK debt, including Government, companies and households, will reach £6.7 trillion, equivalent to 260pc of GDP by 2023, according to PwC analysis.

This would leave households and companies vulnerable to higher interest costs. While this could help households with savings, those with large amounts of borrowing were likely to be financially stretched. Consumer spending has been a major driver of UK GDP growth in recent years.

Mike Jakeman of PwC said: “If the amount that households were spending on debt repayments went up, they would have less money to spend on goods and services, which could result in a slowdown in economic growth."