S&P: UK faces downgrade after election

BRITAIN’S credit rating could be downgraded if the government doesn’t take fierce measures to cut the deficit, Standard & Poor’s has warned.

The rating agency said that the UK could lose its coveted ‘AAA’ rating if a strong fiscal consolidation plan isn’t put into place.

“We expect to review the long-term rating and outlook again once medium-term fiscal policy becomes clearer following the 2010 parliamentary elections,” S&P said yesterday.

It estimates that government debt could rise to 77 per cent of GDP this year and approach 100 per cent in four years time. In 2007, government debt was 44 per cent of GDP.

S&P said: “Substantial uncertainty persists with regard to the details of what the current government has indicated will be a largely expenditure-focused fiscal consolidation programme starting next year.”

It said that spending cuts and tax rises will almost certainly be required to put the public debt burden on a clear downward trajectory before the end of the decade.

S&P joins a range of other credit ratings agencies in saying it will downgrade the UK unless the deficit is cut.