Standard & Poor’s Global Ratings agency has lowered the outlook on Australia’s AAA credit rating from stable to negative.

The storm of confusion circling last weekend’s federal election has hurt Australia’s prospects for paying down its budget deficit.

“The negative outlook on Australia reflects our view that without the implementation of more forceful fiscal policy decisions, material government budget deficits may persist for several years with little improvement,” S&P said in a statement.

“Ongoing budget deficits may become incompatible with Australia’s high level of external indebtedness and therefore inconsistent with a AAA rating.”

Australia’s dollar weakened by as much as 0.7 per cent immediately after the announcement.