Ratings Agency Warns Of Potential Credit Downgrade

Credit ratings agency, Fitch, has joined Moody’s in putting the UK’s top AAA rating on “negative outlook”.

The UK could be downgraded in the next few years warned Fitch Ratings if the government does not act on the level of public debt.

The warning comes a week before George Osborne is due to deliver this year’s budget.

"In light of the considerable uncertainty around the economic and fiscal outlook, including the risks posed to economic recovery by ongoing financial tensions in the eurozone and against the backdrop of a still large structural budget deficit and high and rising government debt, the Negative Outlook indicates a slightly greater than 50% chance of a downgrade over a two-year horizon," Fitch said.

Shadow chancellor Ed Balls told the BBC's Newsnight programme Fitch's announcement showed things were moving in a difficult direction for the economy.

"It shows that there's a growing worry that our economy's not growing, that unemployment's rising, that our borrowing's not coming down as George Osborne had planned.

"Now, I've said to George Osborne always, don't set your policies by the credit rating agencies, but they are a weathervane and they say the wind is blowing in a difficult direction for the British economy."

It emerged this week that Mr Osborne was considering using the UK's top rating status to tap into cheap, very long-term borrowing.

The other leading agency, Standard and Poor's, still has the UK on AAA, with no warning of a possible future downgrade.

(H)