UK and US credit ratings safe for now
Moody’s Investors Services has today announced the credit ratings of the world’s four largest AAA-rated nations are viewed as safe.
According to Moody’s, the world’s four largest AAA-rated sovereign nations, which include Germany, France, the UK and the US are currently “well positioned despite their stretched finances”.
In its quarterly report assessing the prospects of the triple A-rated countries, Moody’s said their Governments are not faced with an immediate threat to their top ratings as the servicing of the debt remains manageable.
Many economists have been concerned about Britain’s debt as it is on target to borrow the equivalent of 12.8% GDP in 2009/10 – surpassing the 12.7% forecast in debt-stricken Greece and well above the 6% average for Europe.
The UK’s debt levels have led many business groups to warn the Government. Recently, David Kern at the British Chambers of Commerce said the UK’s credit rating was being put at risk.
Former IMF chief economist, Simon Johnson, recently warned that the UK’s debt levels should be seen in the same category of highly indebted countries such as Greece.
In the meantime, the US budget deficit this year is projected to be just under 10% of GDP.
Pierre Cailleteau, managing director, Moody’s Sovereign Risk Group, comments: “In light of the muted recovery, discretionary fiscal adjustment is now the principal means of repairing the damage that the global crisis has inflicted on government balance sheets.”
Cailleteau added: “A key issue is whether governments are able and willing to implement such unprecedented adjustments. Growth will support some governments’ adjustment plans more than those of others, but no government can rely on it.”
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