Home
News
In Focus
Business
Metro
Nation
World
Sports
Feature
Opinion
View more »Opinion Columns
Wan LixinOpinion deputy editor of Shanghai Daily
Restaurants get off to a quick start thanks to game-changing policies
High service charges on event ticket refunds call for further regulation
Sunday
- Subscribe
Related News
Britain faces likely debt rating downgrade on S&P's revision
By Pan Pylas |
May 22, 2009, Friday
|
Print Edition
Print Edition
BRITAIN faces the unsettling possibility of seeing its debt rating downgraded, after credit ratings firm Standard & Poor's said yesterday that it has revised the country's outlook to negative from stable.
Though the ratings agency reaffirmed the country's actual long-term credit rating at "AAA" and its short-term rating at "A-1+," it said the outlook had deteriorated because of massive borrowing to deal with the recession and the banking crisis.
The outlook revision does not trigger a formal reevaluation of Britain's rating - unlike being put on credit watch - but does mean that policy makers have to be aware that a downgrade may happen if public finances are not put on the straight and narrow in the near future.
The pound slumped by over 2 US cents to just below US$1.56 after the news, while the FTSE share index fell more than 100 points, or around 2.3 percent.
This is the first time Britain has been put on the negative list since S&P started rating the outlook of the country's public finances in the early 1980s.
S&P said the downward revision reflects a more cautious view of how quickly the country's finances can be repaired and its projections incorporate new estimates of the cost of the government's bailout of the banking sector. It now estimates that the government's net debt burden will rise to nearly 100 percent of economic output by 2013.
"These projections reflect our more cautious view of how quickly the erosion in the government's revenue base may be repaired, the extent to which the growth in government spending can be curtailed, and consequently the pace at which historically high fiscal deficits are likely to narrow," said S&P's credit analyst David Beers.
"The rating could be lowered if we conclude that, after the election, the next government's fiscal consolidation plans are unlikely to put the UK debt burden on a secure downward trajectory over the medium term," he said.
Though the ratings agency reaffirmed the country's actual long-term credit rating at "AAA" and its short-term rating at "A-1+," it said the outlook had deteriorated because of massive borrowing to deal with the recession and the banking crisis.
The outlook revision does not trigger a formal reevaluation of Britain's rating - unlike being put on credit watch - but does mean that policy makers have to be aware that a downgrade may happen if public finances are not put on the straight and narrow in the near future.
The pound slumped by over 2 US cents to just below US$1.56 after the news, while the FTSE share index fell more than 100 points, or around 2.3 percent.
This is the first time Britain has been put on the negative list since S&P started rating the outlook of the country's public finances in the early 1980s.
S&P said the downward revision reflects a more cautious view of how quickly the country's finances can be repaired and its projections incorporate new estimates of the cost of the government's bailout of the banking sector. It now estimates that the government's net debt burden will rise to nearly 100 percent of economic output by 2013.
"These projections reflect our more cautious view of how quickly the erosion in the government's revenue base may be repaired, the extent to which the growth in government spending can be curtailed, and consequently the pace at which historically high fiscal deficits are likely to narrow," said S&P's credit analyst David Beers.
"The rating could be lowered if we conclude that, after the election, the next government's fiscal consolidation plans are unlikely to put the UK debt burden on a secure downward trajectory over the medium term," he said.
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
