S&P warns on fiscal policy
UK risks its triple-A sovereign debt rating if it opts to scale back its fiscal consolidation efforts
By CFOWorld.co.uk | CFO UK | Published 19:46, 03 October 11
Britain would see its triple-A sovereign debt rating come under scrutiny if the government decided to change course on fiscal policy, the credit rating agency Standards & Poor's (S&P) said on Monday.
Such a move would go against the agency’s expectations and the pronouncements of chancellor George Osborne on the subject.
The S&P release coincided with Osborne’s keynote speech at the Conservative Party conference in Manchester where he reaffirmed his commitment to public spending cuts.
Pressure has increased on the chancellor to soften his austerity measures as the UK’s economic recovery struggles to gather momentum.
S&P said that British growth was likely to be slower than the government expected. Howver, the agency reaffirmed its AAA rating for the UK's debt and said the outlook was stable.
“The ratings could come under downward pressure if, against our expectations - and perhaps in response to weakening growth prospects - the coalition government's commitment to fiscal consolidation falters,” S&P said in a statement.
The Conservative-led coalition government aims to virtually eliminate a budget deficit of around 10 percent of GDP by 2015.
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