JP Morgan manager Nick Gartside and Baring manager Alan Wilde have warned the UK's AAA-status is at risk of downgrade following the contraction in GDP during the second quarter.
JP Morgan manager Nick Gartside and Baring manager Alan Wilde have warned the UK’s AAA-status is at risk of downgrade following the contraction in GDP during the second quarter.
Rating agency Moody’s, which placed the UK on a negative outlook in February, and Standard & Poor’s, which said in April “materially weaker economic growth” could lead to “downward pressure” on the rating, could be the first to strip the UK of the highest rating following the fall in output in Q2, revealed yesterday.
The economy shrunk by 0.7% in the three months to June, much more than analyst expectations of a 0.2% contraction.
Gartside (pictured), manager of the£483m JPM Strategic Bond fund, told the FT he believes the AAA rating looks “vulnerable”.
“In terms of its rating and its safe haven status it is an anomaly.”
Meanwhile, Baring’s Wilde said public holidays and the weather cannot be solely to blame for the shrinking economy.
“The data is shocking and no amount of excuses about rainfall or the Queen’s Jubilee can explain away such weak growth,” he said.
“George Osborne’s personal ratings for economic competency are plummeting and the credit rating agencies will be deeply concerned by today’s report … this may well hasten a downgrade.”
This article was first published on Investment Week