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Moody’s cuts UK credit rating to Aa1 from AAA, first time since 1978

Saturday, February 23rd 2013 - 06:19 UTC
Full article 51 comments
UK finance minister George Osborne said the downgrade “doubles” the government resolve to the challenge UK finance minister George Osborne said the downgrade “doubles” the government resolve to the challenge

Moody's Investors Service on Friday cut the United Kingdom's credit rating to Aa1 from AAA for the first time since 1978, citing weakness in the nation's medium-term growth outlook that it now expects to extend for a number of years.

This is the first of the major credit rating agencies to knock the UK off of its top rating. Moody's put the outlook back to stable while both Standard & Poor's and Fitch Ratings have negative outlooks.

UK finance minister George Osborne said the downgrade “doubles” the government resolve to deliver a robust economic plan and is a stark reminder of the nation's debt problems.

The news is likely to intensify criticism from the Labour Party opposition of Osborne's austerity program, which is two years off track from its original goal of largely eliminating Britain's budget deficit by 2015.

Moody's said that despite considerable structural economic strengths, growth is expected to be sluggish due to a combination of weaker global economic activity and the drag on the UK economy “from the ongoing domestic public- and private-sector de-leveraging process.”

Trend growth for the UK economy is between 2 and 2.5%, Moody's sovereign credit analyst Sarah Carlson.

“We see growth slowly building back up to that trend ... but if you take a combination of the growth and fiscal dynamics, the result is that the debt burden of gross general debt to GDP peaks in 2016, which is substantially later than was expected a few years ago” she said.

Moody's estimates debt-to-GDP for the UK peaking in 2016 at 96%, up from just below 90% now.
 

Categories: Economy, Politics, International.

Top Comments

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  • Think

    TWIMC

    How strange……
    An article about a European Queendom’s economy being down rated by a moody American Company…..
    And.....
    An article about an old Malvinas ship, cruising from America to Ireland with Canadian rats as only passengers…….

    Yet not a single word about the III Africa-South America (ASA) Summit, just ended in Malabo, Equatorial Guinea.....

    On this III Summit, attended by many South-American and African presidents, it was decided to integrate Central America & the Caribbean to the organization…..

    And, I nearly forgot,……..:
    The 54 member Countries of the African Union decided, in unison, to recognize “Argentina’s legitimate sovereignty rights over the Malvinas, Georgias & Sandwich del Sur Islands, including all the adjacent maritime territories”
    http://www.pagina12.com.ar/diario/elpais/1-214476-2013-02-23.html

    This would never happen in a serious South-Atlantic News Agency….
    Chuckle chuckle©

    Feb 23rd, 2013 - 07:19 am 0
  • Lou Spoo

    @2

    “54 member Countries of the African Union decided, in unison, to recognize “Argentina’s legitimate sovereignty rights”

    Except they haven't!

    The ASA summit doesn't end until today and as yet no joint declaration has been approved.

    Feb 23rd, 2013 - 07:46 am 0
  • Shed-time

    @2 they'll make some joint declaration... nothing will change.

    End of.

    Feb 23rd, 2013 - 07:55 am 0
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