UK Could Lose Prized AAA Debt Rating, Fitch Warns
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

France Avoids Downgrade

Fitch place le triple A français sous surveillance négative

LE FIGARO: Après son homologue Standard & Poor's, l'agence de notation abaisse à «négative» la perspective de la note du pays tout en maintenant le triple A. Les notes de six autres pays sont directement menacées.

Fitch Ratings brandit à son tour la menace d'une dégradation de la note de la France. Après Standard & Poor's, qui a placé sous surveillance négative la notation de 15 États de la zone euro au début du mois, l'agence de notation annonce ce vendredi qu'elle a abaissé à «négative» contre «stable» auparavant la note de la dette à long terme de la France, tout en maintenant la note de «AAA», la meilleure possible. «La perspective négative indique qu'il y a un peu plus de 50% de chance d'un abaissement de la note d'ici à deux ans», précise l'agence de notation.

«En comparaison à d'autres membres de la zone euro notés AAA, la France est selon le jugement de Fitch la plus exposée à une intensification de la crise», estime l'agence, en raison de «son déficit budgtéraire structurel plus important et un poids de la dette plus grand par rapport» aux autres pays bénéficiant du triple A. «L'intensification de la crise de la zone euro depuis juillet constitue un choc négatif et significatif pour la région et pour l'économie de la France et la stabilité de son secteur financier», souligne Fitch. «En dépit des mesures fiscales additionnelles annoncées en août et novembre», «de nouvelles mesures devraient être nécessaires pour ramener le déficit en-dessous de 3% du PIB en 2013 et stabiliser la dette du gouvernement en dessous de 90% du PIB, étant donné la dégradation du contexte économique et financier», est-il souligné. » | Par Hayat Gazzane | vendredi 14 décembre 2011

UK 'Should Be Downgraded' Before France, Says ECB's Christian Noyer

THE DAILY TELEGRAPH: Britain should have its AAA credit rating [downgraded] before France, according to Christian Noyer, head of the French central bank, as the war of words between the two countries heats up following David Cameron's EU treaty veto.

A downgrade of France's AAA rating would not be justified and the ratings agencies are making decisions based more on politics than economics, said Christian Noyer, who is a European Central Bank policymaker as well as head of the Banque de France.

Standard and Poor's is due to decide whether or not to downgrade eurozone countries in the coming days following an EU agreement on Friday to forge tougher fiscal rules.

"The downgrade does not appear to me to be justified when considering economic fundamentals," Mr Noyer said in an interview with local newspaper Le Telegramme [sic] de Brest.

"Otherwise, they should start by downgrading Britain which has more deficits, as much debt, more inflation, less growth than us and where credit is slumping," he went on. » | Agencies | Thursday, December 15, 2011