Britain has no more room to keep AAA rating: Fitch

29th November 2011, Comments 0 comments

Fitch ratings agency warned Tuesday that Britain's top triple-AAA debt rating was on the line if any further financial and economic shocks hit the country.

Calling the lower growth forecasts the British government released Tuesday as more realistic and adding credibility to its effort to put public finances on a sustainable path, Fitch warned that Britain is now on course to become the highest indebted AAA-rated country behind the United States.

"The capacity of UK public finances to absorb adverse economic and financial shocks that would result in yet higher public debt while retaining its 'AAA' status has largely been exhausted," Fitch said in a statement.

Like a number of other top-rated countries, Britain would need to take off-setting measures to ensure public finances do not worsen in case of a further shock.

Under its current Conservative-Liberal Democrat government, Britain has moved vigorously to cut its public deficit, even at the risk of snuffing out growth.

Finance minister George Osborne, in delivering his autumn statement to parliament on Tuesday, insisted there would be no let-up in the coalition's plans to axe the deficit and steer clear of the global debt storm.

The government lowered its growth projections to 0.9 percent this year and 0.7 percent in 2012, but Osborne ackowledged that if the eurozone heads into a recession as appears increasingly likely it will be hard for Britain to avoid one as well.

Fitch noted the deterioration in the fiscal and economic outlook means that Britain's debt will peak at 94 percent of gross domestic product according to its definition, which will put it above Germany at 83 percent and France at 92 percent.

Fitch currently has a stable outlook on Britain's AAA rating, which means it does not foresee a revision.

The ratings agency said British government has demonstrated "a continuing commitment to placing UK public finances on a sustainable path, and the adoption of more realistic economic forecasts enhances the credibility of the consolidation effort."

© 2011 AFP

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