THE DAILY TELEGRAPH: Britain is edging closer to losing its gold-plated sovereign credit rating due [to] weak growth and ballooning government borrowing, ratings agency Fitch has warned.
“The likelihood of a downgrade has increased,” Fitch said as it reconfirmed the UK’s “negative outlook” but slashed its forecast for 0.8pc growth this year to a 0.3pc decline and warned that international debt will hit almost 100pc of GDP.
The Chancellor will also miss one of his two cast-iron fiscal rules, the ratings agency added, but it did not call for more austerity measures to plug the gap.
Fitch’s decision to tolerate a breach of the debt reduction target without immediately downgrading the UK amounted to an implicit green light for the Chancellor to abandon the rule. It echoed comments this week by Sir Mervyn King, Bank of England Governor, who said that breaking the pledge would be “acceptable” if it was due to the global downturn.
The Government was quick to flag Fitch’s response as an “endorsement” of its austerity measures. “They stress that deliberately going out to add more to the nation’s credit card bill would threaten our international credibility and increase the chances of a downgrade,” the Treasury said in a statement.
Fitch said that “global economic headwinds, including those from the eurozone, have compounded the drag on UK growth from private sector deleveraging and fiscal consolidation”. » | Philip Aldrick | Friday, September 29, 2012
