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June 8, 2010    

Fitch warns of “formidable” challenge for UK

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by Kay Murchie

Credit rating agency Fitch today warned that the UK needs a more ambitious deficit reduction plan, in view of the events in the euro zone.

The pound fell against the dollar after Fitch’s comments, by 1% to $1.437.

According to Fitch, the pace of the deficit reduction needs to be quicker than that announced by the previous Labour Government in April.

The new Con/Lib Coalition Government has already announced plans to shave £6.2 billion off public spending this financial year and further measures are expected in an emergency budget later this month.

Fitch acknowledged that the new Government had acted “very quickly”, making deficit reduction its top priority.

A spokesperson for the Treasury said it agreed with Fitch and said: “Its report makes the case clearly for an acceleration of deficit reduction, particularly in light of events in the euro-area sovereign debt market in recent months.”

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