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Britain could lose its AAA status

THE UK is most likely to lose its 'AAA' status among those countries still in the top tier of sovereign credit ratings, the Fitch rating agency said yesterday.

The UK's credit rating is most at risk among top-rated nations because of Britain's ballooning budget deficit, Fitch added.

"Many credit profiles of major 'AAA' sovereigns have been significantly weakened by the financial crisis and the subsequent recession," David Riley, head of global sovereign ratings at Fitch, said in a statement.

"We have assured people that we're taking the necessary action to cut the deficit in half," Prime Minister Gordon Brown said in London yesterday.

Debt

"Our debt levels are roughly the same when this crisis ends as America, as France, as Germany."

Downgrades from Fitch and other rating agencies such as Standard & Poor's and Moody's raise the cost of government borrowing.

The US's rating also might be at risk of a review if its fiscal position does not stabilise in the next couple of years.

Ireland lost its AAA rating in April and was cut to AA- from AA+ with a "stable" outlook last week.

The move puts the country's rating at the same level as Italy and Cyprus and "reflects the severity of the decline in nominal GDP and the exceptional rise in government liabilities," Chris Pryce, a Fitch director in London, said.

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"The breadth and depth of the country's banking sector problems have substantially increased sovereign risk," he added.

Both Standard & Poor's and Moody's reduced Ireland's sovereign ratings earlier this year.


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