Standard & Poor’s (S&P) has joined the two other credit ratings agencies (CRAs), Moody’s and Fitch Ratings, in allocating a negative outlook to the UK’s coveted AAA rating.
“The outlook revision reflects our view that we could lower the ratings on the UK within the next two years if fiscal performance weakens beyond our current expectations,” S&P said in a statement.
“We believe this could occur in particular as a result of a delayed and uneven economic recovery, or a weakening of political commitment to consolidation.
“We expect economic growth to rise slowly in the medium term, with net general government debt as a percentage of gross domestic product (GDP) continuing to rise in 2015, instead of stabilising in 2014 as previously expected.”
S&P did not call upon the UK government to abandon its austerity programme, but warned: “We continue to believe that government’s efforts over the next few years to engineer the planned correction in the UK’s fiscal accounts will likely drag on economic growth.”
The UK, Germany and Canada are the only major world economies that have managed to retain an AAA rating. Moody’s and Fitch both revised the UK to negative outlook in H112.
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