The ratings agency Standard & Poor (S&P) has lowered it’s outlook on the UK to negative, claiming that Government spending will be hard to rein in amongst political uncertainty surrounding a forthcoming election.
S&P Credit Analyst David Beers explained in a statement:
“We have revised the outlook on the UK to negative due to our view that, even assuming additional fiscal tightening, the net general government debt burden could approach 100 percent of GDP and remain near that level in the medium term.”
He recognised that the S&P take a more cautious view than the government of “how quickly the erosion in the government’s revenue base may be repaired, the extent to which the growth in government spending can be curtailed, and consequently the pace at which historically high fiscal deficits are likely to narrow.”
The Treasury responded by saying that The Budget had set out a clear plan to half the national debt within five years, a plan that was based on a deliberately cautious view of the public finances.
Sterling took another hit against foreign currency on announcement of the news.
What a mess!
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