UK credit rating put on negative watch
Share
Moody’s has put the UK’s AAA credit rating on negative watch because of economic uncertainty.
In a blow to chancellor George Osborne the rating agency says uncertainty in the Eurozone, slippage in the timetable of the deficit reduction programme and the inability of the UK economy to absorb further shock have all contributed.
It states: “The primary driver underlying Moody’s decision to change the outlook on the UK’s AAA rating to negative is the weaker macroeconomic environment, which will challenge the government’s efforts to place its debt burden on a downward trajectory over the coming years.”
It adds: “Moreover, risks to the rating agency’s forecasts are skewed to the downside. In part, these risks are the by-product of a necessary fiscal consolidation programme and the ongoing parallel deleveraging process in both the household and financial sectors.
“Moody’s also believes that the further cutbacks announced last autumn indicate that the government has a reduced capacity to absorb further abrupt economic or fiscal deterioration without incurring a further slippage in its consolidation timetable.”
Moody’s predicts the UK’s debt ration will peak at just under 95% in 2013 or 2015 before gradually declining.
The rating agency also put the AAA rating of France and Austria on negative outlook and downgraded Spain, Italy, Portugal, Malta, Slovakia and Slovenia.
If you enjoyed this article, sign up here to receive daily email updates from Mortgage Strategy and Follow @mortgagestrat
