Forget Greece – UK put on negative outlook
Moody's Investors Service has downgraded six European nations and became the first ratings firm to warn the UK's rating could be at risk.
Just when Greece has swallowed its bitter medicine, ratings firm Moody's has warned of further shocks to the European financial system.
In a blanket move, Moody’s Investors Service has downgraded six European nations and became the first ratings firm to warn the UK's triple A rating could be at risk.
The UK, along with France and Austria which also have top AAA ratings, were all put on negative watch.
Moody's cites the area's weakening ability to implement measures aimed at reducing debt. The firm is also concerned about how the debt crisis is being handled and the impact on the region's various economies.
The ratings firm's actions follow similar moves by Standard & Poor's and Fitch Ratings last month where multiple downgrades were made all at once.
But Moody's has deviated from the other ratings firms by changing the outlook for the U.K. Both S&P and Fitch have a stable outlook on their UK rating.
Italy has been dropped a notch to A3, which is four rungs above speculative-grade territory, and still has a negative outlook. Spain, Portugal, Slovenia and Malta also received one-notch downgrades and still have negative outlooks.
Each of those six countries was downgraded by S&P last month. Fitch downgraded Italy, Slovenia and Spain last month.
While Moody's might have been the last to act, it was the most severe on Portugal and Spain. Among the three biggest ratings firms, Moody's now has the lowest rating on each of those countries.
UK Chancellor of the Exchequer George Osborne said the negative outlook is proof Britain can't waver from its plans to deal with the country's debt.
He said Moody’s was explicit that only thing stopping an immediate downgrade of the UK was the government's fiscal-consolidation plan.
"This is a reality check for anyone who thinks Britain can duck confronting its debt," Mr Osborne said.
Nevil Gibson
Tue, 14 Feb 2012
Tue, 14 Feb 2012
© All content copyright NBR. Do not reproduce in any form without permission, even if you have a paid subscription.
Related News
Related News
Forget Greece – UK put on negative outlook
18840