The prospects of a perfect storm enveloping the U.K. this summer just drew a little closer.
Britain has moved a step closer to losing its prized AAA rating after a leading ratings agency downgraded the country’s outlook because of the deteriorating state of the public finances and political uncertainty over how to repair them.
Ratings agency Standard & Poor’s lowered the outlook to negative from stable. A lower rating would mean that S&P believes Britain is no longer fit to be in the club of top creditworthy nations, undermining its critical ability to borrow cheaply on financial markets.
The move by S&P came minutes before figures showed that the Government’s budget deficit hit £8.5bn in April, the most for that month since records began.
This, however, was grimly amusing:
Stuart Cheek, head of UK Government bonds at BGC Partners, said “it’s big news,” he said. He added that “it should be noted that this is the same rating agency that rated leveraged sub-prime as AAA.”