Growth key to UK’s credit rating

Julian Harris
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BRITAIN’S triple-A credit rating could be in doubt if strong growth fails to deliver the government’s deficit reduction targets, the ratings agency Moody’s said yesterday.

“Slower growth combined with weaker-than-expected fiscal consolidation could cause the UK’s debt metrics to deteriorate to a point that would be inconsistent with a AAA rating,” Moody’s said in a statement.

The government’s fiscal watchdog, the OBR, was forced to revise down its growth forecast for this year to 1.7 per cent this week, from 2.1 per cent.

However, it still expects annual growth of 2.8 to 2.9 per cent from 2013 to 2015.

Fellow rating agency Fitch issued a warning over the growth forecasts, and subsequently its credit rating for the UK.

“The medium-term economic forecasts still appear relatively optimistic,” it said on Wednesday. “If the economic recovery proves weaker than projected, future Budgets may require additional measures to ensure that the government meets it ambitious fiscal targets,” it said.