Fitch has threatened to downgrade the UK's credit rating in the wake of spending plans set out by Liz Truss and Kwasi Kwarteng in the mini-Budget.
Fitch said the country's credit rating remained "AA-" but said there had been a "material change" which required it to update investors.
The agency on Wednesday night warned the "large and unfunded" package announced last month by Mr Kwarteng, the Chancellor, could result in "a significant increase in fiscal deficits over the medium term".
It said the tax cuts revealed in the mini-Budget would deprive the Treasury of £27.7bn in 2023/24 and £31.3bn in 2024/25, leaving earlier spending commitments by the Government underfunded.
A rising deficit would also put the UK on a path to higher government debt, Fitch warned, pushing it from 101pc of GDP in 2022 to 109pc by 2024.
Fitch is the latest ratings agency to warn it could cut the UK's credit rating.
Moody's and Standard & Poor's issued similar notes of their own last week.
Fitch also pointed to "inconsistency" between the policies of the Government and the Bank of England, with the former potentially stoking inflation with tax cuts and the latter trying to tame it by raising interest rates.
And in a blow to Mr Kwarteng's efforts to calm market nerves, the agency said that the Chancellor's decision to abandon a cut to the top rate of tax had "weakened" the credibility of Liz Truss's administration.
It said: "We consider that statements by the Chancellor hinting at the possibility of additional tax cuts and the likely modification of fiscal rules... reduce the predictability of fiscal policy.
"Although the government reversed the elimination of the 45p top rate tax, the reportedly negative impact of the tax package, and related financial market volatility, on public opinion and the government's weakened political capital could further undermine the credibility of and support for the government's fiscal strategy."
Fitch's note came hours after Liz Truss told the Conservative Party conference that the UK "must stay the course" and defended her plan to grow the economy, arguing that the "status quo is not an option".
The Prime Minister said: "I'm determined to get Britain moving, to get us through the tempest and to put us on a stronger footing as a nation."
The Treasury has previously defended the Chancellor's mini-Budget as well, insisting it was "focused on growing the economy to raise living standards for everyone ".