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S&P puts Britain's AAA rating on negative outlook

AFP  London, December 14, 2012
First Published: 09:44 IST(14/12/2012) | Last Updated: 09:47 IST(14/12/2012)

Standard and Poor's cut the outlook on Britain's AAA credit rating from stable to negative on Friday, raising the possibility that it could downgrade the rating in the next two years.


"The negative outlook reflects our view of a one-in-three chance that we could lower the ratings in the next two years if the UK's economic and fiscal performances weaken beyond our current expectations," S&P said in a statement.

They followed the other two main ratings agencies in putting Britain's credit rating on a negative outlook.

"We now expect the United Kingdom's net general government debt as a percentage of GDP to continue to rise in 2015, before declining again," S&P said.

"Future employment or growth shocks could pressure government finances further.

"We are therefore revising our outlook on the unsolicited long-term ratings on the UK to negative, from stable.

"We are affirming our 'AAA/A-1+' long- and short-term unsolicited sovereign credit ratings on the UK," it added.

Fellow rating agency Moody's changed its outlook on Britain's Aaa rating to negative in February when it downgraded the ratings and outlooks of several eurozone countries.

Meanwhile, Fitch reaffirmed its AAA rating for Britain at the end of September, but put it on negative outlook, warning that weak economic growth and a rising debt level was increasing the likelihood of a downgrade.

However Fitch warned earlier this month that the government pushing back by a year its official target for reducing public debt as a proportion of economic output to 2015-16 damaged the "credibility" of Britain's cherished AAA rating.

A spokeswoman for the Treasury, or finance ministry, insisted that Britain's economy was "on the right track" and was making progress in cutting the budget deficit.

"Standard and Poor's assessment aligns them with that of the two other main ratings agencies earlier in the year," she said.

When it came to power in 2010, Prime Minister David Cameron's coalition government introduced a package of deep cuts in public spending in a bid to slash the deficit.

The Treasury highlighted the fact that Standard and Poor's "endorse the government's 'strong commitment to implementing the fiscal mandate" and that the ratings agency "warn against slowing 'the pace and extent of fiscal consolidation".

"It is because we have stuck to that commitment that the deficit is down by a quarter and interest rates are at record lows," the spokeswoman added. (AFP)

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