S&P Puts AAA Rating On Negative Outlook
Britain's gold-plated triple AAA status came under pressure today after an influential credit ratings agency put it on negative watch.
Standard & Poor's (S&P) said there was a one in three chance it could lower Britain's rating within the next two years, if economic conditions weaken in the UK.
It said it expected government debt as a percentage of gross domestic product (GDP) to continue to rise in 2015, before declining again, with future employment or growth shocks putting further pressure on government finances.
The agency said: "In our opinion, many of the factors that have restrained growth in recent years will likely continue to do so in the near term."
A Treasury spokesman said the move brought S&P in line with rival agencies Fitch and Moody's, which both revised the UK to a negative outlook earlier this year.
A downgrade by one of the big three credit ratings agencies would drive up the UK's borrowing costs, potentially jeopardising the Government's deficit reduction plans.
The S&P report comes after Chancellor George Osborne said he will not be able to start bringing down national debt as a percentage of gross domestic product (GDP) in 2015/16, in his Autumn Statement.
He said he must extend his fiscal consolidation period by a year to 2017/18 after the independent tax and spending watchdog, the Office for Budget Responsibility (OBR), said it expected GDP to fall this year by 0.1%, compared to previous estimates of 0.8% growth.
Sky's economics editor Ed Conway said: "It brings Standard and Poor's into line with the other ratings agencies, they all now say that although the UK is officially a AAA rated sovereign debt issuer, they've put a negative outlook on it.
"Essentially that means that it's an official warning there's a chance that it could get downgraded within the next 18 months to two years.
"It'll be a concern for the Chancellor given that it has come just after the Autumn Statement.
"Standard and Poor's citing mainly the fact the UK's debt is continuing to rise to a level that it would see as being inconsistent with a AAA rated country.
"It does seem that within the Treasury there's a growing cognisance that it may be difficult to hang onto that AAA rating in the end."
what do you think?
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Osborne wants the pound to fall by another 25% but then exports will collapse and tourists will fall and the country will be totally bankrupt/
Jonathan Correct me if I am wrong if the pound falls in value by 25% exports from the UK will be 25% cheaper as overseas companies will get 25% more for their euro /dollar Imports on the other hand will be more expensive meaning we will buy less Overseas visitors will get 25% more pounds for their dollar / euro / yen - making visiting the UK cheaper Are you a socialist by any chance, as your logic would appear to indicate you are