UK’s AAA Rating Maintained by S&P

Credit ratings agency (CRA) Standard & Poor’s (S&P) reaffirmed the UK’s AAA credit rating, opting not to follow the lead of its peer Moody’s which in February downgraded the UK from AAA to Aa1. 

S&P added in its assessment, however, that the UK remained on negative watch for a possible downgrade from them later on, implying a one-in-three chance that a S&P UK downgrade will follow before 2015.

“We continue to believe the government’s efforts over the next few years to cut its fiscal deficit will likely drag on economic growth,” the CRA said, adding that a continuing squeeze on consumers’ spending and recession in the eurozone could keep gross domestic product (GDP) weak.

S&P warned that that a downgrade could be triggered either by disappointing economic growth, or, “a reappraisal of our view of the government’s willingness and ability to implement its ambitious fiscal strategy”.

The UK Treasury welcomed S&P’s decision, which it said supported the coalition government’s efforts to reduce the budget deficit. 

 

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