Britain ‘likely to lose’ AAA if debt plans slip

Britain is likely to lose its triple-A status if its plans to cuts its debts falter, while weak growth would put downward pressure on top-rated Netherlands, rating firm Fitch said yesterday.

“For the UK, we forecast debt/GDP to peak at 97 per cent before declining, which would be approaching the limit consistent with it retaining its AAA,” Ed Parker, one Fitch’s top sovereign analysts, told the Reuters Global Markets Forum chat room.

“So if we see fiscal loosening, extended economic weakness causing slippage in fiscal targets then a downgrade would be likely.”

On the Netherlands he said there was no immediate threat to its coveted triple-A grade but that weak growth and any rise in debt would increase downward pressure on the rating.

A bailout of Spain would be rating neutral meanwhile, and could even have a broader positive impact if it improved Madrid’s access to funding markets.