UK among nine countries with credit rating warnings
Moody’s, the credit rating agency has put the United Kingdom’s outlook on their current AAA rating to negative. They suggest that the ability of the UK economy to absorb more negative news is limited and they expect the UK to suffer from further problems with the Eurozone.
The agency adjusted its ratings on nine European sovereign debts, but the Uk was perhaps the most significant. The nine countries affected were:
- Austria: outlook on Aaa rating changed to negative
- France: outlook on Aaa rating changed to negative
- Italy: downgraded to A3 from A2, negative outlook
- Malta: downgraded to A3 from A2, negative outlook
- Portugal: downgraded to Ba3 from Ba2, negative outlook
- Slovakia: downgraded to A2 from A1, negative outlook
- Slovenia: downgraded to A2 from A1, negative outlook
- Spain: downgraded to A3 from A1, negative outlook
- United Kingdom: outlook on Aaa rating changed to negative
The press release from Moody’s describes the reasons for their actions as:
- The uncertainty over (i) the euro area’s prospects for institutional reform of its fiscal and economic framework and (ii) the resources that will be made available to deal with the crisis
- Europe’s increasingly weak macroeconomic prospects, which threaten the implementation of domestic austerity programmes and the structural reforms that are needed to promote competitiveness
- The impact that Moody’s believes these factors will continue to have on market confidence, which is likely to remain fragile, with a high potential for further shocks to funding conditions for stressed sovereigns and banks.