Britain’s AAA Rating Under Threat

(Telegraph) – RATINGS AGENCY STANDARD & POOR’S moved a step closer to downgrading the country’s credit rating today by changing its outlook from stable to negative. The decision was taken because of the deteriorating state of the public finances and political uncertainty over how to repair them.

A ratings downgrade would be devastating for the economy, pushing up the cost of borrowing for the Government, which would then feed through to higher taxes and higher interest rates nationwide.

In a stark warning, S&P said that it would consider lowering the UK’s top-tier AAA if the next Government does not take radical measures to reduce the scale of public debt.

David Beers, primary credit analyst for Standard & Poor’s, told the Telegraph: ‘The rating could be lowered if we conclude that, following the election, the next Government’s fiscal consolidation plans are unlikely to put the UK debt burden on a secure downward trajectory.’

Mr Beers also cast doubt on the Chancellor’s Budget forecasts, saying that the Government’s debt burden could approach 100% of GDP by 2013 — and stay at that level in the medium term.

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