This article is from the source 'bbc' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at http://www.bbc.co.uk/go/rss/int/news/-/news/business-17375585
The article has changed 6 times. There is an RSS feed of changes available.
Version 1 | Version 2 |
---|---|
UK warned again about possible credit rating downgrade | UK warned again about possible credit rating downgrade |
(about 6 hours later) | |
The Fitch credit ratings agency has joined Moody's and put the UK's top AAA rating on "negative outlook". | The Fitch credit ratings agency has joined Moody's and put the UK's top AAA rating on "negative outlook". |
Fitch Ratings warned on Wednesday that it could downgrade the UK in the next few years if the government does not contain the level of public debt. | Fitch Ratings warned on Wednesday that it could downgrade the UK in the next few years if the government does not contain the level of public debt. |
The warning comes as Chancellor George Osborne puts the finishing touches to this year's Budget, which will be delivered next week. | The warning comes as Chancellor George Osborne puts the finishing touches to this year's Budget, which will be delivered next week. |
A credit rating in theory determines a country's borrowing costs. | A credit rating in theory determines a country's borrowing costs. |
Fitch said that while the UK had a strong commitment to reducing the budget deficit and had an economy that was underpinned by a "high-income, diversified and flexible economy", it had "very limited fiscal space to absorb further adverse economic shocks". | |
"In light of the considerable uncertainty around the economic and fiscal outlook, including the risks posed to economic recovery by ongoing financial tensions in the eurozone and against the backdrop of a still large structural budget deficit and high and rising government debt, the Negative Outlook indicates a slightly greater than 50% chance of a downgrade over a two-year horizon," Fitch said. | |
Chief Secretary to the Treasury Danny Alexander said the move underlined the need for the government to stick to its deficit reduction plans: "This is a salutary reminder as to why Britain needs to deal with the enormous debts and deficits we inherited, why we have got to stick to those plans. | Chief Secretary to the Treasury Danny Alexander said the move underlined the need for the government to stick to its deficit reduction plans: "This is a salutary reminder as to why Britain needs to deal with the enormous debts and deficits we inherited, why we have got to stick to those plans. |
He said there would be no unfunded giveaways in next week's Budget. | He said there would be no unfunded giveaways in next week's Budget. |
'Weathervane' | 'Weathervane' |
Shadow chancellor Ed Balls told the BBC's Newsnight programme Fitch's announcement showed things were moving in a difficult direction for the economy. | Shadow chancellor Ed Balls told the BBC's Newsnight programme Fitch's announcement showed things were moving in a difficult direction for the economy. |
"It shows that there's a growing worry that our economy's not growing, that unemployment's rising, that our borrowing's not coming down as George Osborne had planned. | "It shows that there's a growing worry that our economy's not growing, that unemployment's rising, that our borrowing's not coming down as George Osborne had planned. |
"Now, I've said to George Osborne always, don't set your policies by the credit rating agencies, but they are a weathervane and they say the wind is blowing in a difficult direction for the British economy." | "Now, I've said to George Osborne always, don't set your policies by the credit rating agencies, but they are a weathervane and they say the wind is blowing in a difficult direction for the British economy." |
Fitch currently expects the country's public debt to stabilise at around 94% of its gross domestic product (GDP) by 2014-15. | Fitch currently expects the country's public debt to stabilise at around 94% of its gross domestic product (GDP) by 2014-15. |
If it does, Fitch will reaffirm the UK's rating as AAA. | If it does, Fitch will reaffirm the UK's rating as AAA. |
It emerged this week that Mr Osborne was considering using the UK's top rating status to tap into cheap, very long-term borrowing. | It emerged this week that Mr Osborne was considering using the UK's top rating status to tap into cheap, very long-term borrowing. |
One month ago, Fitch's rival agency Moody's sparked debate about the UK's rating after it said it was watching the UK's credit worthiness. | One month ago, Fitch's rival agency Moody's sparked debate about the UK's rating after it said it was watching the UK's credit worthiness. |
The other leading agency, Standard and Poor's, still has the UK on AAA, with no warning of a possible future downgrade. | The other leading agency, Standard and Poor's, still has the UK on AAA, with no warning of a possible future downgrade. |