Belfast Telegraph

UK credit rating faces pressure over debt pile

The UK's prized AAA credit rating remains under "significant pressure", the Fitch rating agency has warned.

David Riley, the head of global sovereign ratings at the agency, said Chancellor George Osborne's admission in last month's autumn statement that he would miss his 2016 target date for public debt to start falling had been a "negative event" for the UK.

While he stressed that a downgrade of the AAA rating was not a "decided event", he said that Britain remained "vulnerable" to fresh global economic "shocks".

"There is increasing concern that the economy isn't recovering as quickly as we had hoped," he told BBC Radio 4's The World at One.

"This does leave the UK quite vulnerable either to a worsening of the situation in Europe or some kind of shock coming from the United States or elsewhere. It does mean that its AAA rating is under quite significant pressure."

While he said that there were still some strong underlying economic "fundamentals" to support the AAA rating, the situation could change if the Budget in March showed a further weakening of the public finances. "If we were, following the Budget, to see that the debt is going up even higher than we currently project and is going to peak even later than we currently forecast, then that would put a lot of pressure in terms of the UK AAA rating because it would mean that the UK government is projecting a debt level of 100% of GDP," he said.

"That is not really consistent with the UK retaining the AAA rating."

Any downgrade to the UK's rating would also mean that the Government would potentially face higher borrowing costs on the international markets, adding more pressure.