Moody's lifts UK's credit rating gloom – for now
Saturday 12 December 2009
Britain's credit rating is secure for now but could be cut if the Government fails to show it can rebuild the public finances by 2013, Moody's said yesterday, in the first public statement from a major credit rating agency since Wednesday's pre-Budget report.
Analysts at Moody's Investor Service said yesterday that the UK was unlikely to lose its AAA rating in the immediate future, but warned: "The rise in debt and higher interest costs could test the ratings under some scenarios."
The update helped to stabilise gilt prices, which fell sharply on Thursday amid heightened speculation that the UK's credit rating was under threat because of concerns that the pre-Budget report had not done enough to rein in borrowing. Sterling also rose against the dollar and the yen yesterday.
"Only the UK and the US are classified as 'resilient', rather than 'resistant'," Moody's said. "Their resiliency will be tested in the next couple of years, but for now they have a high degree of financeability and debt affordability."
Servicing Britain's £700bn public debt pile would become more costly if it was downgraded from the top rating. The Chancellor, Alistair Darling, admitted this week that borrowing in the UK is expected to hit £178bn this year and £176bn in 2010.
PricewaterhouseCoopers predicted that the UK's net debt would peak at 78 per cent of gross domestic product by 2015 earlier this week, but analysts at Citigroup believe it could hit 100 per cent within the next four years. No country has gone over 100 per cent in the ratio of debt to GDP and managed to keep its AAA rating with the three largest agencies.
Anxiety about Britain's credit rating sparked further political arguments yesterday, with former cabinet minister David Blunkett insisting that leaks of rows over how the pre-Budget report had been framed could jeopardise the country's credibility with lenders.
Look beyond the usual shows for the best festive telly
Geoffrey Macnab does not like the comedian's big screen debut
The battle for control of Stieg Larsson's £30m legacy
Ten best places to live in the UK: Hart in Hampshire takes top spot
French pub fined €9,000 after customers returned empties to bar - because it's 'undeclared labour'
David Cameron takes his biggest gamble yet as he gets tough on Europe over immigration
Burglar steals video tapes of child abuse, hands them into police
Paul Walker's daughter Meadow attends Justin Bieber Believe premiere
- 1 Tim Sherwood challenges Daniel Levy to set out vision for Tottenham Hotspur’s future
- 2 French pub fined €9,000 after customers returned empties to bar - because it's 'undeclared labour'
- 3 Sun will 'flip upside down' within weeks, says Nasa
- 4 #Teamnigella: It’s the only side to be on
- 5 Christmas comes early: Justin Bieber is 'retiring from music'
- < Previous
- Next >
iJobs Money & Business
£59999 - £80001 per annum + Benefits: Pro-Recruitment Group: A Top 10 firm in ...
£50000 - £75000 per annum + benefits + bonus: Harrington Starr: Project Manage...
£60000 - £90000 per annum + benefits + bonus: Harrington Starr: Business Analy...
£Negotiable: Citifocus: High calibre individual with institutional client serv...