Spending Review: Britain keeps AAA rating
by Peter Wozniak
The government’s spending cuts do not threaten Britain’s credit rating, according to Moody’s Investors Service, which maintained the UK as a AAA-rated country.
The ratings agency, one of the world’s largest, argued that although the AAA status could still be downgraded in the future, the UK’s economy is strong enough to endure the impending cuts to public spending.
Kenneth Orchard, Moody’s lead analyst for the UK, said: “Moody’s believes that the UK has the wherewithal and ability to meet these challenges whilst maintaining its AAA rating.”
Mr Orchard did however issue caveats, warning that sluggish growth as a result of “the explosion in the government’s deficit and debt metrics over the past three years has eroded the cushion that previously existed” for the economy.
Moody’s also warned that continued instability in financial markets and the state of recovery in the Eurozone, could threaten the UK’s rating in the future.
Nonetheless, the agency’s vote of confidence in the UK’s ability to “stabilise and eventually reverse the deterioration in its financial strength” will come as a relief to the chancellor George Osborne, as it apparently vindicates the government’s austerity drive.
Labour has argued that the speed and scale of cuts risks dragging the economy back into a ‘double-dip’ recession.
The spending review will be revealed on October 20th.
