Moody’s: negative public sentiment weighs on water outlook

Negative public sentiment towards water companies increases the risk of a harsh price determination in December 2024, which may weaken the sector's credit quality and make it less attractive to investors according to ratings agency, Moody's.

In a report for 2024, the agency said the UK water sector outlook remains negative, reflecting rising social risks. Moody’s observed that with water company business plans identifying £96bn of investment in 2025-30, including to address public environmental concerns, average combined household bills are set to rise by over 30% by 2030 (before inflation).

Moody's went on to warn that should companies receive significantly less than they have asked for following Ofwat interventions, it may hinder their ability to meet more challenging performance commitments. Vice president and senior credit officer at Moody’s, Stefanie Voelz, commented: "Negative public opinion may increase pressure on the government and regulators to change established frameworks and set potentially unachievable targets.”

Moody’s said that ongoing regulatory pressure, affordability concerns and subdued economic growth continue to weigh against a positive outlook.