UK’s rating not secure, warns S&P
GEORGE Osborne’s bid to get the UK’s spiralling Budget deficit under control was dealt a blow yesterday when Standard & Poor’s (S&P) warned Britain remains at risk of losing its prized triple-A rating.
The credit rating agency said it was keeping its negative outlook on the UK’s debt despite Osborne’s austerity Budget and warned the economy was unlikely to grow at the pace forecast by the Office for Budget Responsibility (OBR).
“Standard & Poor’s medium-term economic forecasts for the UK are less optimistic than the assumptions underlying the Budget. We therefore believe there is still a material risk that the UK’s net general government debt burden may approach a level incompatible with the ‘AAA’ rating,” S&P said in a statement.
The pound fell to $1.5017 in the minutes immediately after the announcement as the credit rating agency’s move fuelled fears over the coalition government’s grip on the economy. Within a week of taking office, Osborne announced £6bn of emergency spending cuts and outlined proposals for the sharpest cuts in public spending in post-war history.
“The chancellor is very clear the job is not done. The next step will be to set out individual departmental spending totals in the Spending Review on 20 October,” said a Treasury spokesman.