Fitch Ratings on Wednesday lowered the outlook on the UK's government debt from stable to negative after new Prime Minister Liz Truss announced a series of debt-funded economic reforms that have sparked market turmoil.

The large and unfunded fiscal package announced as part of the new government's growth plan could lead to a significant increase in fiscal deficits over the medium term, Fitch said in a statement, noting the tax cuts and higher budget deficits rank high among key rating drivers.

Another primary concern is the high level of government debt. Fitch said that the change in fiscal trajectory will push general government debt to 109 percent of GDP by 2024 from an estimated 101 percent in 2022, reflecting higher primary deficits and a weaker growth outlook.

Significant fiscal stimulus and the inconsistency between fiscal and monetary policy stances, combined with strong inflationary pressures, negatively impacted the financial markets' confidence and the credibility of the policy framework, Fitch said.

"We consider that statements by the chancellor hinting at the possibility of additional tax cuts and the likely modification of fiscal rules legislated in January reduce the predictability of fiscal policy," the statement said.

Speaking at the Conservative Party Conference on Wednesday, Truss said, "Cutting taxes is the right thing to do morally and economically," and stressed that growth is the only priority for the country's economy.

The debt-funded tax cuts have been criticized for disproportionately benefiting the wealthy and corporations.

And they have been poorly received by the financial markets – after the policy was announced last month, the British pound hit a record low and UK 10-year government bond yields soared as high as 4.6 percent, forcing the Bank of England to step in with a buying plan.

The government on Monday abandoned its plan to abolish the 45 percent top rate of income tax.