NEW YORK: Fitch Ratings affirmed the United Kingdom's AAA sovereign rating on Friday, but warned that government debt levels and lackluster growth could threaten that top-notch grade.
Fitch cited the UK's diversified economy, robust institutions and political stability in its decision, adding that the country's independent monetary policy framework gives it added flexibility.
"However, weaker-than-expected growth and fiscal outturns in 2012 have increased pressure on the UK's 'AAA' rating, which has been on negative outlook since March 2012," Fitch said in a statement, meaning it is still on review for a possible downgrade.
"Fitch now expects the economy to contract by 0.3 per cent in 2012 compared to an expectation of growth of 0.8 per cent when the UK sovereign rating was last formally reviewed in March 2012," the agency added.
With a weak recovery to start 2013, "Fitch has not revised its previous judgment that the potential annual growth rate of the UK economy is around 2.25 per cent," the statement said. Standard & Poor's rates the UK at AAA with a stable outlook.
Moody's Investors Service rates it Aaa with a negative outlook. Britain's top finance officials in recent months have played down the importance of the country's top-notch credit rating.
"The credit rating is important, but it's also important to have the right economic policies. That's what really matters and the credit rating reflects that," Finance Minister George Osborne said last month.
Analysts in a Reuters poll in July said Britain has about a one in three chance of losing its AAA sovereign credit rating, a move that would put huge pressure on Osborne, who is sticking with fiscal austerity measures.
Britain's economy contracted less than expected during the second quarter, offering a higher base for an expected return to tepid growth.
indiatimes.com
Fitch cited the UK's diversified economy, robust institutions and political stability in its decision, adding that the country's independent monetary policy framework gives it added flexibility.
"However, weaker-than-expected growth and fiscal outturns in 2012 have increased pressure on the UK's 'AAA' rating, which has been on negative outlook since March 2012," Fitch said in a statement, meaning it is still on review for a possible downgrade.
"Fitch now expects the economy to contract by 0.3 per cent in 2012 compared to an expectation of growth of 0.8 per cent when the UK sovereign rating was last formally reviewed in March 2012," the agency added.
With a weak recovery to start 2013, "Fitch has not revised its previous judgment that the potential annual growth rate of the UK economy is around 2.25 per cent," the statement said. Standard & Poor's rates the UK at AAA with a stable outlook.
Moody's Investors Service rates it Aaa with a negative outlook. Britain's top finance officials in recent months have played down the importance of the country's top-notch credit rating.
"The credit rating is important, but it's also important to have the right economic policies. That's what really matters and the credit rating reflects that," Finance Minister George Osborne said last month.
Analysts in a Reuters poll in July said Britain has about a one in three chance of losing its AAA sovereign credit rating, a move that would put huge pressure on Osborne, who is sticking with fiscal austerity measures.
Britain's economy contracted less than expected during the second quarter, offering a higher base for an expected return to tepid growth.
indiatimes.com
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