Britain’s credit rating could be downgraded after last week's general election delivered a hung parliament, Moody’s has warned.

The ratings agency said the lack of a decisive majority party could put the brakes on negotiations on Britain leaving the European Union, which would have a negative impact on the UK’s credit rating.

A lower credit rating can make it more expensive to raise money, as the borrower is considered less able to manage repayments.

As a result, lenders charge a higher interest rate to cover the risk of the borrower defaulting.

Moody’s also said that Britain’s drive to reduce its budget deficit could be slowed down as a consequence of the election outcome, warranting further worries about the country’s rating.