Fitch sees risk to UK AAA sovereign rating
Britain could lose its AAA credit rating after the country’s chancellor George Osborne admitted he will miss his target to reduce Britain’s debts and have to borrow an extra £100bn.
After the Office for Budget Responsibility – a UK government agency tasked with tracking the government’s fiscal plans – issued a stark assessment of the public finances in yesterday’s Autumn Statement, delivered by Osborne (pictured) to the UK Parliament, ratings agency Fitch said it will review Britain’s status next year and suggested a downgrade is now more likely.
The OBR cut its predictions for UK economic growth again and said that even after a five-year Parliament of spending cuts and tax rises, the government will still be borrowing one in every ten pounds it spends.
The government’s debt – the total stock of its borrowing – will not fall as a share of the economy until 2016/17, the OBR said.
Osborne had promised to reduce the debt as a proportion of GDP by 2015/16, but admitted to parliamentarians that the target will be missed by a year.
“Missing the target weakens the credibility of the UK’s fiscal framework, which is one of the factors supporting the rating,” Fitch said.
This article was first published on IFAonline