S&P warns Japan over rating threat after disaster
Thursday 28 April 2011
Standard & Poor (S&P) yesterday threatened to cut Japan's sovereign credit rating again just three months after it last downgraded the country's debt.
The rating agency said the huge cost of last month's earthquake and tsunami will damage weak public finances unless squabbling politicians can agree to raise taxes. S&P confirmed its long-term sovereign credit rating on Japan at AA minus but relegated the outlook to negative from stable.
S&P cut Japan's sovereign credit rating in February for the first time since 2002, accusing the government of lacking a plan to deal with its mounting debt and warning that the divided government had made the problem worse.
In a further sign of weakness in Japan's beleaguered economy, retail sales tumbled 8.5 per cent in March –the biggest fall for 13 years. The country ground to a halt last month even in areas not affected directly by the giant earthquake and its aftermath.
Japan's public debt is twice its $5trillion (£3trn) economy and will swell further as the country spends heavily on reconstruction after the disaster, S&P said.
"If there are no revenue enhancing measures such as tax increases, we expect the central and local governments to bear most of this cost," S&P said.
Budget deficits have put pressure on major nations' sovereign ratings and borrowing costs as the economic crisis has moved from the financial sector to public finances. Last week S&P downgraded its outlook on the AAA rating of the US, where politicians are also wrangling over how to deal with the country's overweening deficit.
The European Union is also facing a critical test as crises in Greece, Ireland and Portugal mount up to the worst crisis since the euro was launched.
filmFilm producers sue Warner Bros for $75m over Hobbit films
sportNapoli 2 Arsenal 0: Gunners must now face either Real Madrid, PSG, Bayern Munich, Atletico Madrid or Barcelona in knock-out stages
Swedish stars ask fans for £195 pledges on crowd-funding website
voicesJust when you thought you could find a man, get married, and have a baby by the age of 35... it turns out you’re too late, says Grace Dent
musicAs Mariah Carey and Noddy Holder rake in the royalties from their classics, why there hasn't been a decent festive hit for 20 years?
theatreAuthor Daniel Rosenthal recalls the mishaps that almost brought the curtain down on the likes of John Gielgud and Diana Rigg
lifeAs the Royal Mail plans to phase out deliveries on two wheels, it's no wonder posties are in a spin
musicThe 21-year-old beat Ella Eyre and Chlöe Howl to win the honour
lifeFull of the joys and want to help your fellow man? December isn't the time to do it
techLuke Blackall reports on precision engineered prams and babygros that monitor your child 24-7
Nelson Mandela memorial: ‘Bogus’ interpreter made mockery of Barack Obama’s tribute
David Cameron explains selfie with Obama and Helle Thorning-Schmidt at Mandela Memorial
French café starts charging extra to rude customers
Krokodil in Mexico? Teenager hospitalised after 'injecting drug into her genitals'
Australia incest case: Filthy and severely deformed children found in remote farming community after generations of inbreeding
- 1 Nelson Mandela memorial: ‘Bogus’ interpreter made mockery of Barack Obama’s tribute
- 2 It’s shameful that our universities have accepted gender segregation under pressure from the most oppressive religious fanatics
- 3 John McAfee's $100 'anti-NSA' device: 'this is coming and cannot be stopped'
- 4 Is Facebook making us forget? Study shows that taking pictures ruin memories
- 5 Australia incest case: Filthy and severely deformed children found in remote farming community after generations of inbreeding
iJobs Money & Business
£77099.84 - £96375.26 per annum + Bonus + Benefits : Harrington Starr: My clie...
£45000 - £60000 per annum + Bonus and Package: Harrington Starr: Trading appli...
£50000 - £60000 per annum + BONUS + BENEFITS: Harrington Starr: A leading prov...
£70000 - £90000 per annum + BONUS + BENEFITS: Harrington Starr: A leading mark...