Britain loses AAA rating
Rating agency Moody’s cut Britain’s debt rating Friday by one notch from the top-grade AAA to Aa1, citing slow growth and a rising debt burden.
Moody’s also cut its AAA rating for the country’s central bank, the Bank of England, by one step, also to Aa1.
The main driver for the sovereign 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.”
The British economy is constrained both by the turgid global economy, Moody’s said, and the drag from businesses and the British government slashing their debt burdens.
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.”
There are growing calls for Chancellor George Osborne to quit after the UK lost its cherished AA credit rating despite the Coalition’s efforts to cut the deficit.
Moody’s, one of the three main credit ratings agencies, announced that it was cutting Britain’s rating to AA1, one notch below the top grade, dealing the government a massive economic blow.
The UK has long trumpeted its AAA rating as evidence that the country is economically stronger than the beleaguered eurozone.
The Government’s austerity programme has long been intended to avoid the country avoiding the pariah status of European states like Greece, and George Osborne has previously trumpeted the UK’s AAA rating as evidence the policy was working.
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