Fitch says UK top credit rating at risk over debt

By Kei Okamura and Hideyuki Sano

TOKYO (Reuters) - Britain is most at risk among the big economies to lose its top-notch credit rating, while Japan faces a review of its rating if government debt issuance rises greatly, Fitch Ratings warned on Tuesday.

David Riley, Fitch's co-head of global sovereign ratings, told Reuters Television in an interview that Britain's AAA rating is more at risk than that of any of the four big economies with a top rating. The other AAA countries are the United States, Germany and France. His comments sent the pound down more than a cent to $1.6616.

"It's clear that the UK's ability to sustain large public fiscal deficits and a level of public debt without driving up interest rates and without putting sterling under significant pressure is much less than in the case of the U.S," he said.

"If there was another significant fiscal stimulus package in the UK, then UK rating would be at risk."

Riley welcomed growing political consensus towards fiscal discipline ahead of a general election expected next year. Fitch's outlook on the rating is still stable.

"Whichever government will come to office, we are expecting more stringent and more detailed plan for stabilising public financing. But if we don't get that after election, the UK rating is at quite significant risk."

The IMF projects Britain to run a deficit of 11.6 percent of GDP in 2009, the second biggest among G20 countries after 12.5 percent in the United States.

SERIOUS CONCERN