Fitch Ratings downgraded its credit rating on the United Kingdom on Friday, citing the country’s weaker economic and fiscal outlook.
The rating agency cut the U.K.’s long-term foreign and local currency issuer default ratings to ‘AA+’ from ‘AAA’. The outlook is ‘stable.’
Fitch said that the downgrade primarily reflected a weaker economic and fiscal outlook and hence the upward revision to Fitch’s medium-term projections for UK budget deficits and government debt.
Fitch now forecasts the general government gross debt to peak at 101 percent of gross domestic product in 2015-16 and will only gradually decline from 2017-18. This compares with its previous projection of debt at 97 percent of GDP by 2015-16 and declining from 2016-17 .
The agency also pointed out that the higher-than-projected budget deficits and debt primarily reflected the weak growth performance of the U.K. economy in recent years, partly due to headwinds of private and public sector deleveraging and the Eurozone crisis.
In February, the U.K. lost its top-notch rating for the first time since 1978 when Moody’s Investors Service downgraded the country’s rating to Aa1 from Aaa.
In April, however, Standard and Poor’s said that it will retain the country’s triple-A rating, though it warned the rating may be cut if the economic situation worsened further.
by RTT Staff Writer
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