S&P says Britain's AAA at risk if growth, deficit disappoint

LONDON Fri Apr 5, 2013 5:40pm BST

A view shows the Standard & Poor's building in New York's financial district February 5, 2013. REUTERS/Brendan McDermid

A view shows the Standard & Poor's building in New York's financial district February 5, 2013.

Credit: Reuters/Brendan McDermid

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LONDON (Reuters) - Standard & Poor's warned Britain on Friday that worse-than-expected economic growth or slow progress in fixing its budget deficit could cost the country its top-notch credit rating.

S&P affirmed the UK's AAA sovereign credit rating but kept the outlook as negative.

"The outlook remains negative, reflecting our view of at least a one-in-three chance that we could lower the ratings if the UK's economic and fiscal performances were to weaken beyond our current expectations," S&P said in a statement.

Britain lost its AAA rating from Moody's in February, an embarrassment for the Conservative-led government which had promised to protect the country's credit rating when it took power in 2010.

But slower-than-expected economic growth since then has meant the government is behind on its programme to return the country to fiscal health.

S&P said on Friday it expected the British economy to grow by an average of 1.6 percent a year between 2013 and 2016, slightly slower than forecasts last month issued by the country's independent budget watchdog.

Fitch said in March it was likely to lower its AAA rating on Britain before the end of April.

A spokesman for Britain's finance ministry noted S&P's comment that a downgrade could be prompted by a change in the government's determination to fix its fiscal shortfall.

"This serves as a reminder that our country cannot afford to simply run away from our problems," the spokesman said.

"There are no easy answers to a legacy of debt built up over a decade. Though it is taking time, we are slowly but surely fixing this country's economic problems."

(Reporting by William Schomberg, David Milliken, Daniel Bases and Luciana Lopez. Editing by Jeremy Gaunt.)

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Comments (2)
Raymond.Vermont wrote:
Well majority of British people already assume (after all the palaver of Moody’s declaration) the UK is fully downgraded, so to suggest it is and then it isnt, is only going to make mainstream UK media, look bigger arses than they already are…

Apr 05, 2013 8:20pm BST  --  Report as abuse
Raymond.Vermont wrote:
So what Credit Rating is the European Union rated at?

Does that ‘rating’ include a Germany ‘Province’ that isnt really willing to write blank cheques out to other ‘Provinces’, and all despite whatever Mr Draghi pretends?

Apr 05, 2013 11:18pm BST  --  Report as abuse
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