Belfast Telegraph

Tuesday 21 October 2014

Fresh blow for UK credit rating

Chancellor George Osborne unveiled dire growth and borrowing figures in the Budget

The UK's credit rating has suffered a fresh blow after a major agency placed it on watch for a downgrade.

Fitch warned the country faced a negative outlook days after Chancellor George Osborne unveiled dire growth and borrowing figures in the Budget.

Another of the big ratings agencies, Moody's, became the first to strip Britain of its gold-plated AAA assessment last month.

Fitch has placed the UK on "rating watch negative", indicating there is a "heightened probability of a downgrade in the near term".

It expects to complete a full review of the sovereign credit rating by the end of April.

The agency said the move "reflects the latest economic and fiscal forecasts published by the Office for Budget Responsibility (OBR) that indicate that UK government debt will peak later and at a higher level than previously expected by Fitch".

The OBR is now predicting that general government gross debt (GGGD) will peak at 100.8% in 2016-17 - a level Fitch has previously suggested would result in a downgrade.

"The persistently weak performance of UK growth, in part due to European growth, has increased uncertainty around the UK's potential output and longer-term trend rate of growth with significant implications for public finances," said the agency.

Shadow Treasury minister Chris Leslie said: "This is yet another blow to a downgraded Chancellor who made keeping the confidence of the credit rating agencies the number one test of his economic policy. What really matters are the economic realities which Fitch are responding to including, as their statement says, 'the persistently weak performance of UK growth'.

"George Osborne's plan has catastrophically failed on growth, living standards and the deficit. But instead of a change of direction and action to kickstart the flatlining economy all we got this week was more of the same failing policies. That's why this more of the same Budget will be remembered as a wasted chance to change course before it was too late."

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