Budget May Determine If U.K. Keeps Top S&P Credit Rating
Britain’s AAA grade is on a negative outlook, which “implies a 1-in-3 chance that the rating will go down,” Moritz Kraemer, head of sovereign ratings at S&P, told reporters at the Euromoney Bond Investors Congress in London today. “The budget may contain relevant information on the future policy course.”
Moody’s Investors Service took Britain’s rating down to Aa1 from Aaa on Feb. 22, citing weakness in the economic-growth outlook and challenges to the government’s fiscal-consolidation program. While the opposition Labour Party used the downgrade to criticize the government’s policies, Osborne shrugged it off, citing stable gilt yields.
The chancellor will announce his budget in Parliament on March 20. S&P put the U.K. on a negative outlook on Dec. 13, a week after Osborne said he will probably miss his debt-reduction target. Fitch Ratings said the same month that missing the target “weakens the credibility of the U.K.’s fiscal framework.” It will review the rating in 2013 incorporating the budget, it said.
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