UK rating downgrade ‘unavoidable’
A downgrade of Britain’s top notch credit rating is potentially unavoidable because the country can not grow out of its debts, a leading asset manager has claimed.
By Philip Aldrick
Legal & General Investment Management said “the UK’s credit rating is likely to be reviewed in the coming years” as it becomes clear that the Government will miss its growth forecasts and fall back into recession.
The warning will come as a blow to George Osborne, who has staked his reputation on the UK retaining its AAA rating despite emerging from the recession with the biggest budget deficit in the G20.
James Carrick, economist at LGIM, said that stimulus spending of about £17bn a year would help lift growth but “hasten” any ratings action. “Under all scenarios, we think the Chancellor will miss his projections,” he said.