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Moody's outlook on UK stable
By Christina Fincher |
September 21, 2010, Tuesday
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Print Edition
Print Edition
THE government's commitment to fiscal discipline and the flexibility of the economy means Britain's triple-A credit rating is robust, ratings agency Moody's said yesterday.
It said the stable outlook on Britain's rating was supported by the coalition's deficit-cutting plans, the long maturity profile of UK government debt and the likelihood that growth will continue even in the face of "austere fiscal consolidation."
"The global financial crisis of 2008 caused serious long-term damage to the British government's balance sheet," said Kenneth Orchard, Moody's lead analyst for the United Kingdom.
He said Britain's economic outlook was also more challenging because of private sector deleveraging, the uncertain state of the financial sector and slower growth in the UK's main trading partners.
"Nevertheless, Moody's believes that the UK has the wherewithal and ability to meet these challenges whilst maintaining its Aaa rating," Orchard said.
Moody's said its Aaa rating was premised on a central scenario that the UK economy will maintain a moderate pace of growth over the medium term and that the primary budget balance will be in surplus by around 2014.
The Treasury welcomed the report. "This supports the government's approach to cutting the deficit," said a Treasury spokesman. "Moody's says that their stable outlook for the UK's Aaa credit rating is driven by the action to cut the deficit, and that reducing spending is more likely to bring down borrowing than relying on tax rises."
It said the stable outlook on Britain's rating was supported by the coalition's deficit-cutting plans, the long maturity profile of UK government debt and the likelihood that growth will continue even in the face of "austere fiscal consolidation."
"The global financial crisis of 2008 caused serious long-term damage to the British government's balance sheet," said Kenneth Orchard, Moody's lead analyst for the United Kingdom.
He said Britain's economic outlook was also more challenging because of private sector deleveraging, the uncertain state of the financial sector and slower growth in the UK's main trading partners.
"Nevertheless, Moody's believes that the UK has the wherewithal and ability to meet these challenges whilst maintaining its Aaa rating," Orchard said.
Moody's said its Aaa rating was premised on a central scenario that the UK economy will maintain a moderate pace of growth over the medium term and that the primary budget balance will be in surplus by around 2014.
The Treasury welcomed the report. "This supports the government's approach to cutting the deficit," said a Treasury spokesman. "Moody's says that their stable outlook for the UK's Aaa credit rating is driven by the action to cut the deficit, and that reducing spending is more likely to bring down borrowing than relying on tax rises."
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