Thursday, January 17th 2013 - 00:37 UTC

Britain’s prized AAA credit rating under ‘significant pressure’; review in March

Britain’s prized AAA credit rating remains under “significant pressure”, the Fitch rating agency warned this week. David Riley, the head of global sovereign ratings at the agency, said Chancellor George Osborne’s admission in last month’s autumn statement that he would miss his 2016 target date for public debt to start falling had been a “negative event” for the UK.

While he stressed that a downgrade of the AAA rating was not a “decided event”, he said that Britain remained “vulnerable” to fresh economic “shocks” elsewhere in the world.

“There is increasing concern that the fiscal consolidation is happening more slowly, that the economy isn’t recovering as quickly as we had hoped,” he told BBC Radio 4’s The World at One.

“This does leave the UK quite vulnerable either to a worsening of the situation in Europe or some kind of shock coming from the United States or elsewhere.

“It does mean that its AAA rating is under quite significant pressure”.

While he said that there were still some strong underlying economic “fundamentals” to support the AAA rating, the situation could change if the Budget in March showed a further weakening of the public finances.

“If we were, following the Budget, to see that the debt is going up even higher than we currently project and is going to peak even later than we currently forecast, then that would put a lot of pressure in terms of the UK AAA rating because essentially, on a very broad measure, it would mean that the UK Government is projecting a debt level of 100% of GDP,” he said.

“And in our view that is not really consistent with the UK retaining the AAA rating”.

Any downgrade to the UK’s rating would be a huge blow to Osborne who has placed great emphasis on the importance of maintaining the AAA status.

It would also mean that the UK Government would potentially face higher borrowing costs on the international markets, adding to the pressure on the public finances.

Earlier in the week Fitch said that the United States faces a “material risk” of losing its triple-A status if there is a repeat of the wrangling seen in 2011 over raising the country's self-imposed debt ceiling.

The credit rating agency also targeted Spain and warned that the EU member will continue to face downgrade risks even if it avoids having to ask for a bailout, while Ireland could claw its way back into the single-A rating band if a deal is struck to share the burden of its banking debts.

Despite December's deal by US politicians in Washington to avoid the so-called “fiscal cliff” of spending cuts and tax hikes, Fitch's head of sovereign ratings, David Riley, said pressure on the country's rating was increasing.

Riley said the United States did not need the same kind of super-strength austerity some major developed economies are currently implementing because it was grinding out more economic growth than other high-debt nations.

11 comments Feed

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1 toooldtodieyoung (#) Jan 17th, 2013 - 07:07 am Report abuse
Nice one George!!!!

You and all of your coalition f**kwitts can give yourselves a big pat on the back.

All those cuts, All that pain, All that misery for what??

This government is a bunch of useless, spineless, wife-swapping, self congratulating retards.

Can't deliver on their promises, can't get laid in a brothel, can't save the AAA credit rating. That was, of course, what it was all about anyway wasn't it?

and yet, thanks to our ineffective chancellor, this will soon be flushed down the toilet as well.

Thanks a lot..................... Clowns
2 stick up your junta (#) Jan 17th, 2013 - 08:07 am Report abuse
I will save the Argies the bother,erm here goes. Engleese pirates are finished ja ja ja jaaaaaaaa
3 Condorito (#) Jan 17th, 2013 - 01:34 pm Report abuse
No government could have done much better.
Back in 1997 UK gov debt was 40% of GDP. Brown/Blair dynamic duo then went gaga throwing money at everything. They left it at 80%. Without civil unrest it would be impossible to turn that around.

I have said this before on here, the UK (and European public) is not ready and does not understand the real depth of cuts that would have to be made to return to a fiscally sustainable position.
4 Zethee (#) Jan 17th, 2013 - 05:45 pm Report abuse
They've done very well to even keep it this long. It's easy to just “blame the government” but they were left in this mess and have done quite a lot to sort it out.
5 briton (#) Jan 17th, 2013 - 08:05 pm Report abuse
No doubt the argie bloggers will relish this news,

But as long as theirs is zero zero zero minus, we have nothing to worry about,

As for this stupid brain dead government,
Yes they are trying, but once again just like the other ex=government called labour,
It’s always the poor that suffer whilst the bloody rich get richer,
And he still want to give our money to other countries,
Now nearly 12 billion, when will they learn,
And the 30 odd billion we give to their EURO Masters,

We need
Out of the euro gravy train,
Stop overseas aid,
Stop the rich getting richer,
More investment in
Our ship yards, steel , roads , railways , Defence ,
And a new government perhaps [ ukip]
6 toooldtodieyoung (#) Jan 17th, 2013 - 09:19 pm Report abuse
4 Zethee

who should we blame?
Someone has to be accountable the mess that this country is in. Someone's policies put this country in the toilet and someone else's pulled the “Flush”

Are you suggesting that the “government” isn't to blame for this? Are you saying that the government didn't do this, that someone else, somewhere else did this?

In my ( inexperienced ) opinion the government ( Labour ) ruined this country and then the government ( The Coalition ) continue to drag it deeper into the mire. There is no one else to blame.......
7 Condorito (#) Jan 17th, 2013 - 10:02 pm Report abuse
The electorate are as much to blame as government. The electorate would never accept the cuts required to balance the books. Any governments proposing cuts anywhere near what is required would be annihilated, hence the government can only tinker around at the edges implementing the meager cuts proposed in their manifesto.
8 Monkeymagic (#) Jan 18th, 2013 - 06:18 pm Report abuse

You are correct. Successive governments will squeeze the middle as it makes least noise. Neither will squeeze either end.

So the richest companies and individuals will continue to avoid their share of taxation.

There will continue to be an enormous “benefits culture” where those who don't work have a lifestyle similar to those that do.

As Margaret Thatcher said, socialism works until you run out of somebody else's money. Gordon Brown not only ran out of somebody else's money, he took out a massive mortgage on it. Now those same people have to pay it off.

And still the rich avoid tax, and the scroungers take their benefits.
9 Malvinero1 (#) Jan 19th, 2013 - 01:48 am Report abuse
uk is FINISHE! Why waste time on her.....
AHAHAHAHA poor deluded ex empire
10 Rob the argentine (#) Jan 20th, 2013 - 04:26 am Report abuse
Malvinero, r u high tonight? if UK is finish, as u say, what about us (Argentina)?
11 Condorito (#) Jan 21st, 2013 - 02:17 pm Report abuse
I like the Thatcher quote, I hadn't heard that one before. It is so true.

It is true that you say “the rich avoid tax, and the scroungers take their benefits”, but the middle (who decide the outcome of elections) still have unrealistic expectations of the level of public services that the country can afford, effectively forcing the government to spend too much.

Europe is shrinking only slightly, but as the rest of the world grows (3-4% / year), it's the relative diminishing that is more important. I would like to see some real political leadership. The PM should talk some home truths and say, look, we're FUBARed, we can turn it around with hard work and cross party political consensus. Then they could start by reducing generous holiday allowance of 25 - 30 days per year to 10-15 days a year like most of us have here in the developing world :)

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