Ratings agency puts UK on negative outlook

The UK has been told its credit rating could be cut in the future, potentially raising borrowing costs, according to the BBC.

The Moody’s ratings agency released the statement after concerns about the eurozone crisis’s possible impact on the growth prospects of the UK. It put Britain on ‘negative outlook’, which implies there is a 30 per cent possibility of its AAA credit rating being taken away within 18 months. Austria and France have also been warned while Italy, Portugal and Spain’s ratings have been lowered.

In response, Chancellor George Osborne has claimed the US agency’s comments were not a criticism of the UK government’s economic policy. He explained that it comes as a reality check that Britain must deal with its debts and can’t veer off the path of managing its debts. He added that this is another organisation warning the UK that if it borrows or spends too much its credit rating will be taken away.

But Shadow Chancellor Ed Balls insisted Moody’s statement was intended as a warning to Britain. He said that unless there is growth, if the plan is unbalanced it is self-defeating and Moody’s statement is the first sign of evidence that the ratings agencies are aware of the fact that the Chancellor’s plan is not working. Mr Balls went on to say that he has consistently pointed out that without growth and jobs, there is no chance of reducing the deficit.