Friday, 22 February 2013


The credit rating agency Moody’s has downgraded Britain by one notch from the top grade AAA to AA1.
The agency cited slow growth and a rising debt burden.
The rating for the Bank of England was also cut by one step by Moody’s to AA1.
The main driver for the downgrade, Moody’s said, “is the increasing clarity that, despite considerable structural economic strengths, the UK’s economic growth will remain sluggish over the next few years”.


Moody's said the country's recovery has proven to be significantly slower than previous rebounds from recession, and Moody's said it did not expect the situation to change.
"Moreover, while the government's recent Funding for Lending Scheme has the potential to support a surge in growth, Moody's believes the risks to the growth outlook remain skewed to the downside."
Moody's said that slow growth would retard a projected rise in tax revenues and make progress difficult for the government's fiscal consolidation program, "which will now extend well into the next parliament."
Meanwhile, the government's growing debt load would reduce the shock-absorption capacity of government finances at least into 2016.
Moody's projected that government debt would continue to rise and peak at 96 percent of gross domestic product in 2016, much later than previous projections.
"After it was elected in 2010, the government outlined a fiscal consolidation program that would run through this parliament's five-year term and place the net public-sector debt-to-GDP ratio on a declining trajectory by the 2015-16 financial year," ratings agency said.

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