S&P’s changes UK outlook to negative
by Kay Murchie
Credit rating agency, Standard & Poor’s (S&P), has revised its outlook for the UK from ‘stable’ to ‘negative’ following the announcement that Government borrowing soared to almost £8.5 billion in April.
Official figures show that public sector net borrowing rose to £8.46 billion last month, more than four times the £1.84 billion figure in April last year.
It is the first potential downgrade of UK public debt since the agency began rating Government debt more than 30 years ago.
According to S&P, the revised outlook was prompted by its opinion that the UK’s debt burden may reach 100% of Gross Domestic Product (GDP). According to the latest Office for National Statistics figures, public debt is currently 53% of GDP.
Yesterday, the International Monetary Fund (IMF) called on the Government to implement more ambitious plans to reduce the huge scale of public borrowing.
Today’s news, however, had an impact on sterling which fell more than 1% to $1.5514 against the dollar. The pound has experienced a recovery in recent weeks after hitting a six-month high yesterday to $1.5794 against the US currency.
The Chancellor, Alistair Darling, predicted last month that net borrowing over the financial year as a whole would reach a record high of £175 billion.
Meanwhile, returning to S&P’s revised outlook, the agency said reducing the Government’s debt burden depends on the timing and shape of the economic recovery.
Credit analyst, David Beers, comments: “The rating could be lowered if we conclude that, following the election, the next Government’s fiscal consolidation plans are unlikely to put the UK debt burden on a secure downward trajectory over the medium term.
“Conversely, the outlook could be revised back to stable if comprehensive measures are implemented to place the public finances on a sustainable footing, or if fiscal outturns are more benign than we currently anticipate“, added Mr Beers.
Discuss this in the Finance Markets forums
Story link: S&P’s changes UK outlook to negative
Add to Bookmarks:
Related financial stories to: S&P’s changes UK outlook to negative
- Gloomy outlook for debtors
- Gloomy outlook for the UK job market
- Retailers warn of bleak outlook
- Japan revises economic outlook upwards
- Bleak outlook for city centre apartment investors
- Outlook remains bleak for fixed-rate remortgagers
- Oil rises as US economic outlook shows glimmer of hope
- British Chambers of Commerce forecasts gloomy outlook for economy
- Leading economist delivers pessimistic outlook for global growth
- Millions in negative equity
Tags: April, Debt News, GDP, Government, International Monetary Fund, negative, rating, Standard & Poor’s, sterling, UK
Previous: « Gross mortgage lending 60% down
Next: UK retail sales up in April »
Visited 303 times, 65 so far today
No Comments »
No comments yet.
RSS feed for comments on this post.
