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| Fitch downgrades UK credit rating to AA+ | Fitch downgrades UK credit rating to AA+ |
| (35 minutes later) | |
| The Fitch credit ratings agency has downgraded the UK to AA+ owing to a weakened economic outlook. | The Fitch credit ratings agency has downgraded the UK to AA+ owing to a weakened economic outlook. |
| The move, after Moody's downgrade in February, came as Chancellor George Osborne defended the government's austerity plan. | The move, after Moody's downgrade in February, came as Chancellor George Osborne defended the government's austerity plan. |
| Fitch said its downgrade primarily reflected a weaker economic and fiscal outlook. | Fitch said its downgrade primarily reflected a weaker economic and fiscal outlook. |
| Mr Osborne has said his was the "right plan" and that the economy was "healing". | Mr Osborne has said his was the "right plan" and that the economy was "healing". |
| On Thursday, Christine Lagarde, the International Monetary Fund (IMF) managing director, warned that severe spending cuts might curb an economic recovery. | On Thursday, Christine Lagarde, the International Monetary Fund (IMF) managing director, warned that severe spending cuts might curb an economic recovery. |
| But Mr Osborne said he would make his case when IMF officials visit the UK next month. | But Mr Osborne said he would make his case when IMF officials visit the UK next month. |
| "Britain's got the right plan in terms of dealing with its deficit," he told the BBC, speaking before Fitch published its report. | "Britain's got the right plan in terms of dealing with its deficit," he told the BBC, speaking before Fitch published its report. |
| "We've got a plan that gives us credibility in the world and enables us to borrow at very low interest rates. | "We've got a plan that gives us credibility in the world and enables us to borrow at very low interest rates. |
| "It's also a plan that has demonstrated flexibility, so as we've had problems, for example in the eurozone, we've been able to adjust to the impact of that. | "It's also a plan that has demonstrated flexibility, so as we've had problems, for example in the eurozone, we've been able to adjust to the impact of that. |
| "I think that the British economy is healing, and confronting the problems built up over many years." | "I think that the British economy is healing, and confronting the problems built up over many years." |
| Fitch said its downgrade "primarily reflects a weaker economic and fiscal outlook" but returned its outlook to "stable", removing the threat of further rate action in the near term. | Fitch said its downgrade "primarily reflects a weaker economic and fiscal outlook" but returned its outlook to "stable", removing the threat of further rate action in the near term. |
| 'Playing with fire' | 'Playing with fire' |
| IMF officials recently raised doubts about Mr Osborne's economic strategy amid weak economic data. | |
| IMF chief economist Olivier Blanchard warned that he was "playing with fire" if he continued his current strategy. | IMF chief economist Olivier Blanchard warned that he was "playing with fire" if he continued his current strategy. |
| And Ms Lagarde said the UK should scale back austerity measures if growth were "particularly low". | And Ms Lagarde said the UK should scale back austerity measures if growth were "particularly low". |
| While the IMF supported austerity policies in general, "we've also said that, should growth be particularly low, then there should be consideration to adjusting by way of slowing the pace [of austerity]", she said. | While the IMF supported austerity policies in general, "we've also said that, should growth be particularly low, then there should be consideration to adjusting by way of slowing the pace [of austerity]", she said. |
| "Looking at numbers... the growth numbers are certainly not particularly good." | "Looking at numbers... the growth numbers are certainly not particularly good." |
| 'Lacklustre private demand' | 'Lacklustre private demand' |
| In its twice-yearly World Economic Outlook published on Wednesday, the IMF slashed its forecast for growth to 0.7% in 2013 after saying in January that the country's economy could expect 1% growth. | In its twice-yearly World Economic Outlook published on Wednesday, the IMF slashed its forecast for growth to 0.7% in 2013 after saying in January that the country's economy could expect 1% growth. |
| The fund also expects the economy to grow 1.5% in 2014. That figure is slightly above the 0.6% growth forecast in last month's Budget. | The fund also expects the economy to grow 1.5% in 2014. That figure is slightly above the 0.6% growth forecast in last month's Budget. |
| "In the United Kingdom, the recovery is progressing slowly, notably in the context of weak external demand and ongoing fiscal consolidation," the IMF report said. | "In the United Kingdom, the recovery is progressing slowly, notably in the context of weak external demand and ongoing fiscal consolidation," the IMF report said. |
| It said economic weakness and a lack of willingness to lend were holding back the private sector. | It said economic weakness and a lack of willingness to lend were holding back the private sector. |
| The IMF rarely gives direct advice, preferring to give discreet prompts. | The IMF rarely gives direct advice, preferring to give discreet prompts. |
| It said about the UK: "Greater near-term flexibility in the path of fiscal adjustment should be considered in the light of lacklustre private demand." | It said about the UK: "Greater near-term flexibility in the path of fiscal adjustment should be considered in the light of lacklustre private demand." |
| 'Tackling problems head-on' | 'Tackling problems head-on' |
| The IMF is scheduled to arrive in the UK next month to conduct a thorough investigation of the economy, as part of its "Article IV" consultations. | The IMF is scheduled to arrive in the UK next month to conduct a thorough investigation of the economy, as part of its "Article IV" consultations. |
| The consultations are made annually, and allow the IMF to monitor member countries and issue recommendations about economic policy. | The consultations are made annually, and allow the IMF to monitor member countries and issue recommendations about economic policy. |
| Mr Osborne said: "We'll explain how, for example, in the recent budget we've taken further steps to support the economy through the help-to-buy housing scheme, what we've done on the Bank of England on the remit for the Monetary Policy Committee, through the further measures we're going to take to confront our deficit and make sure Britain gets ahead in the world. | Mr Osborne said: "We'll explain how, for example, in the recent budget we've taken further steps to support the economy through the help-to-buy housing scheme, what we've done on the Bank of England on the remit for the Monetary Policy Committee, through the further measures we're going to take to confront our deficit and make sure Britain gets ahead in the world. |
| "I've got no doubt that the British economy has problems, but I've also got no doubt that the British government is tackling those problems head-on and making sure we can have a more prosperous future." | "I've got no doubt that the British economy has problems, but I've also got no doubt that the British government is tackling those problems head-on and making sure we can have a more prosperous future." |