Britain keeps top credit rating: Moody's

20th September 2010, Comments 0 comments

Moody's Investors Service said Monday that Britain had retained its top-level 'Aaa' credit rating despite the nation's stretched public finances and challenging economic outlook.

"The global financial crisis of 2008/2009 caused serious long-term damage to the British government's balance sheet," said Moody's analyst Kenneth Orchard in an annual credit report on Britain.

"The country's economic outlook is also more challenging because private sector deleveraging, the uncertain state of the financial sector and slower growth in the UK's main trading partners are not conducive to allowing GDP growth to return to its pre-crisis trend rate," he added.

"Nevertheless, Moody's believes that the UK has the wherewithal and ability to meet these challenges whilst maintaining its Aaa rating."

The British government wants to pursue deep public spending cuts as it seeks to slash a record public deficit and balance the books.

That commitment has helped the country retain a stable outlook on its credit rating, according to Moody's.

"Moody's stable outlook on the UK's Aaa rating -- implying that the rating is not expected to change in the foreseeable future -- is largely driven by the government's commitment to stabilise and eventually reverse the deterioration in its financial strength," added the agency.

"Government debt is also well-structured, thus limiting re-financing risk.

"Moreover, the UK economy appears sufficiently flexible and robust to grow moderately, even in the face of the challenges mentioned above and austere fiscal consolidation."

The Conservative-Liberal Democrat coalition is widely expected to identify more sweeping expenditure cuts on October 20, when it will publish the outcome of its so-called comprehensive spending review.

The coalition inherited a record 154.7-billion-pound deficit from the previous Labour administration which it ousted at a general election in May.

© 2010 AFP

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