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Fitch puts UK on negative rating watch
by James Phillipps on Mar 22, 2013 at 17:19
Fitch has placed the UK on a negative rating watch, increasing the likelihood it will downgrade its coveted AAA-rating in the near future.
The move follows on from Moody’s downgrading the UK in February, cutting its sovereign debt rating from AAA to AA1 on concerns about the ‘challenges’ of reducing its debt mountain.
Similarly, Fitch announced the negative rating watch after the Office for Budget Responsibility (OBR) forecast general government gross debt and public sector net debt to peak in 2016-17 at 100.8% and 85.6% of GDP and only then begin to decline the following year. Fitch had previously said that a failure to stabilise gross debt below 100% of GDP and place it on a clear path down towards 90% over the medium-term would likely result in a downgrade.
The ratings agency said: ‘Fitch has revised down its forecasts for economic growth in 2013 and 2014 from 1.5% and 2.0% to 0.8% and 1.8%, respectively. These forecasts were published 15 March and are broadly in line with the OBR's latest forecasts.
‘The persistently weak performance of UK growth, in part due to European growth, has increased uncertainty around the UK's potential output and longer-term trend rate of growth with significant implications for public finances.’
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