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S&P puts UK’s high investment rating on negative watch

Published time: December 14, 2012 08:12
Edited time: December 14, 2012 18:14
AFP Photo/Eric Piermont

Tags

Finance, Global economy, Investment

The Standard & Poor's rating agency has threatened to cut Britain’s gold-plated triple AAA status over concerns of weaker than expected economic growth.

Standard & Poor’s (S&P) said there was a one in three chance it could lower Britain’s rating within two years, if economic conditions become worse.

The agency said, it expected Britain’s Government’s debt to GDP ratio to be increasing until 2015, before it starts to go down again. Growing unemployment and growth shocks may become additional burdens for state finances.

“In our opinion, many of the factors that have restrained growth in recent years will likely continue to do so in the near term,” the S&P wrote.

S&P has already downgraded France and the US and only Germany has a secure triple A rating.

Britain’s Government debt comprised 68% of its GDP in October 2012, with increasing foreign loans expected to be adding to the figure, says Anna Bodrova of Investcafe. But Britain’s weighted monetary policy gives the country a significant advantage,Bodrova adds.

“One needs to understand that talking of loans by Britain, we mean an extremely cautious monetary approach and weighted fund raising, when the market environment allows borrowing at minimum yields,” the Investcafe expert explained.

To preserve the highest investment rating Britain now just needs to think over the measures it plans to take to cap further government debt growth and demonstrate that to the world, Bodrova concluded.

Among other leading rating agencies, Fitch placed Britain's rating on negative outlook in March, and will conduct a review next year, while Moody's announced a negative watch in February.

In a similar move Friday rating agency maintained France’s AAA on Friday and warned that it might downgrade it during 2013. Earlier France’s rating was downgraded by Moody’s and Standard & Poor’s. However, President François Hollande commented that French government does not decide its policies “according to one agency or another”, but “according to the interests of France.”

Comments (8)

SuperiorEuropean (unregistered) 16.12.2012 10:33

LOL, Britain rates itself! (unregistered) wrote in #3
People are not so stupid that they dont realise the uk rates itself and downgrades all its competitors!!! .. . and how many ratings agencies are in the UK? UK owned?I think you'll find they're all ~american~!And if the american agencies downgraded the usa... then it must have been FAR WORSE for the usa and simply too difficult to plaster over the cracks in the thin wall over the real problems in the usa and maintain their AAA status.
Recently an economist said the usa should be on a par with Argentina re. bond ratings but the effect on the world economy would be too great. In the meantime, the major holders of u.s.treasuries HAVE been dumping them to buy assets in AFRICA! Try using a search engine re. 'africa chinese assets dollars' ... be my guest!

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SuperiorEuropean (unregistered) 16.12.2012 10:16

This has less to do with economics and MORE to do with the impending fiscal catastrophe in the usa. which has huge problems with its current debt, the interest it pays to foreign investors and its ability to keep rolling-over its u.s.treasuries now that the BRICS and Asia don't want more of its paper. The UK has austerity, the opposite of the debt-fuelled rubbish the usa is engaged in.
"Mmmm! Gotta somehow attack them 'non-KoolAid-drinker s' who're spoiling show for the usa by actually RECOVERING, eh usa?"

And so... the usa, WHICH IS DOING NOTHING ABOUT ITS PROBLEMS, is eager to point at some other nation which IS doing something about its much lower debt and far smaller problems.
The broken usa is desperate to turn the world's gaze away from its curency problems and blacken the name of a competing currency that might pick up all that flight-to-alternativ e-capital outflows from the usa at the end of next month!

BTW the usa IS doing something... it's fiddling the economc numbers! See the 'shadow economic figures' using the 1970s measure that still work, for more details.7/6%? Really? More like 20+%, usa!

Nice try, usa... but we see what you are doing! FAIL!

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Peter Jennings (unregistered) 15.12.2012 16:44

@1974, PM Cameron cuts a dashing figure on his stage?
Not if he took off his corset he wouldn't. He's got permanent suntan to hide the plastic.
Can't argue will the rest of your comment though.

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