We have revised the outlook on the UK to negative due to our view that, even assuming additional fiscal tightening, the net general government debt burden could approach 100 percent of GDP and remain near that level in the medium term," Standard & Poor's credit analyst David Beers said in a statement.
Beers said S&P had a more cautious view than the UK government of "how quickly the erosion in the government's revenue base may be repaired, the extent to which the growth in government spending can be curtailed, and consequently the pace at which historically high fiscal deficits are likely to narrow".
The June gilt future and the pound tumbled sharply after the announcement.
Thursday, May 21, 2009
Britain's Credit Rating Suffers From Brown's Debt Policy
What we should be discussing is what some of us have warned of for some time - Standard & Poor's downgrading of Britain's credit rating. Their outlook for the UK economy is now "negative" and while it is not yet changing our AAA rating, it warns that there are huge questionmarks over public finances. It is only a matter of time before the AAA rating is downgraded. Here's what Reuters say...