The credit ratings agency revised the outlook on the UK's rating to negative from stable, warning that the Government has "very limited fiscal space to absorb further adverse economic shocks".
In a major blow for George Osborne ahead of next week's Budget, Fitch said the "risks and uncertainty" surrounding the Coalition's debt reduction plans were "material".
The Treasury said the decision is a warning to those calling for deficit-funded giveways in next week's Budget.
Only last month, Moody's also put Britain's top-notch rating on a negative outlook, implying a one-in-three chance of a downgrade.
"A week from the Budget this is a reminder of why it is essential Britain sticks to its plans to deal with its debts," a Treasury spokesman said.
"This is just another warning to anyone who believes there can be deficit-financed giveaways in next week's Budget," he added.
Fitch cited the eurozone crisis – which "is not resolved and could once more intensify" – and the backdrop "of a still large structural budget deficit and high and rising government debt" as the main drivers.
The ratings agency expects the UK's public debt to stabilize at around 94pc of its gross domestic product by 2014-15. Such a performance would allow it to reaffirm the country's ratings at AAA with a stable outlook, it said.
The warning represented the second major blow for the Chancellor after the UK's leading pension group criticised plans to issue 100-year gilts and warned "most" of its members will not buy them.
The National Association of Pension Funds said the proposed term was "too long" and not an attractive investment proposition.
The Telegraph
No comments:
Post a Comment