Saturday, 20 April 2013

Fitch cuts UK credit rating

While the financial crisis in the euro area has abated recently, sovereign debt remains an issue for many developed economies, as Fitch's downgrade of the UK on Friday reminds us. From Reuters:

Britain's credit standing took a further blow on Friday when Fitch Ratings became the second major international agency to strip the country of its top-notch credit rating...

Fitch trimmed the rating to AA-plus from AAA, citing a weaker economic and fiscal outlook. But it returned the outlook to "stable", removing the threat of any further rating action, at least in the near term.

The impact on markets is expected to be minimal.

"The downgrade only tells us what was already known: that fiscal consolidation has ground to a halt and that the growth outlook is poor," said Rob Wood, UK economist at Berenberg Bank.

Moody's had been the first rating agency to downgrade the UK in February.

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