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UK's top credit rating under threat

Published on: Thursday, 21st May 2009 11:50 AM     By      Administrator


 

The UK's premium credit rating is under threat without action to tackle soaring debt, a leading ratings agency has said. 

src- Yahoo News

Standard & Poor's has warned that debt could rise to 100% of output by 2013, which could lead to the UK losing its coveted 'AAA' status.

S&P has held the rating for the moment, but lowered its outlook on the UK to "negative" because of worries over the fast-deteriorating public finances and how long it could take to repair the hole.

Analyst David Beers said: "Our outlook revision on the UK reflects that, even assuming additional fiscal tightening, the net general government debt burden could approach 100% of GDP and remain near that level in the medium term."

The warning came as official figures showed net borrowing surging to a worse-than-expected £8.5 billion in April - over four times higher than last year - as tax receipts dive and spending rises. Chancellor Alistair Darling expects to borrow a record £175 billion this year, with debt as a share of GDP peaking at 79% in 2013/14.

When S&P last looked at its ratings in January it assumed the debt burden would rise from about 49% of GDP in 2008 to 83% in 2013.