In a world where the value and risks of sovereign debt is being constantly threatened, one of the world’s oldest nations will keep its Aaa rating.
Moody’s announced that “Despite a weak post-crisis balance sheet and challenging economic outlook, the UK is able to meet these challenges whilst maintaining its Aaa credit rating.”
“The UK’s Aaa rating is premised on Moody’s central scenario that the UK economy will maintain a moderate pace of growth over the medium term, that the primary budget balance will be in surplus by around 2014, and that the restructuring of the country’s banking sector will only incur small additional costs.”
“However, the explosion in the government’s deficit and debt metrics over the past three years has eroded the cushion that previously existed,” said Kenneth Orchard, Moody’s lead analyst for the UK.
Put another way, the UK rating is better than those of Spain, Portugal, or Greece, but the Aaa rank may not last for long.
Douglas A. McIntyre
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