Moody’s warns over Britain’s credit rating

The outlook for Britain’s prized triple-A credit rating remains stable but weaker growth and slippage in the government’s fiscal plans could lead to a reassessment, credit ratings agency Moody’s said.
By The Newsroom
Published 9th Jun 2011, 09:42 BST

The government aims to virtually eliminate a budget deficit of around 10 per cent of GDP over the next four years, but lacklustre growth has caused some people to doubt whether it will meet this target.

“Moody’s has the UK at a triple-A rating with a stable outlook,” a Moody’s spokesman said.

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“However, as we’ve been saying for a while, in a situation of lower growth combined with weaker than expected fiscal consolidation, we would reconsider our stance,” he added.

Investors took fright earlier after a report quoted a Moody’s analyst as raising doubts over the outlook for the UK’s triple-A rating, causing September gilt futures to plunge by almost half a point.

However, the contract subsequently recovered from most of its losses and analysts said the report stated nothing new and served merely as a reminder of some of the risks ahead.

“I’m not sure there’s much new information in there,” said Andy Chaytor, strategist at RBS.

Related topics:BritainInvestorsGDP