Fitch strips Britain of triple-A credit rating

Move considered an embarrassment for Britain's Conservative-led government

Britain's Chancellor of the Exchequer, George Osborne. Photograph: Stefan Wermuth/Files/Reuters

Britain's Chancellor of the Exchequer, George Osborne. Photograph: Stefan Wermuth/Files/Reuters

 

Britain's credit standing took a further blow today when Fitch Ratings became the second international agency to strip the country of its top-notch credit rating.

Fitch trimmed the rating to AA-plus from AAA, citing a weaker economic and fiscal outlook. But it returned the outlook to "stable", removing the threat of any further rating action, at least in the near term.

"Despite the loss of its 'AAA' status, the UK's extremely strong credit profile is reflected in its 'AA+' rating and the stable outlook," Fitch said in its statement.

Sterling fell against the dollar after the news.

Fitch's move is an embarrassment for Britain's Conservative-led government which promised to slash the deficit and protect the country's rating when it took power in 2010.

Moody's was the first agency to downgrade Britain in February and Standard & Poor's has said there is at least a one-in-three chance it will follow suit.

Sluggish economic growth has pushed the government's deficit reduction programme several years off track, leading to criticism that its harsh austerity programme is being counter productive. Even the International Monetary Fund, once a key ally in the case for fiscal austerity, has urged Britain to consider slowing the pace of deficit cuts.

Finance minister George Osborne admitted last month that growth this year would be half the level previously assumed and public debt would rise for several more years.

Fitch's downgrade will be seized upon by critics of the government's austerity policy, but market reaction is likely to be more muted. France and the United States have both been stripped of their triple-A rating by more than one agency without any major loss of investor confidence.

Reuters

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