The UK’s AAA credit rating was put on hot water as the ratings agency Moody’s made speculations that the current euro crisis as well as a credit squeeze on the banking sector is taking a toll on the country’s predicament on defaulting on its debts affecting future dealings on speculative derivatives such as spread betting and CFDs.
The decision was based on the euro zone’s outlook for institutional reform of its fiscal and economic framework and the amount of resources that will be utilized for combating the crisis.
Other countries included in the agency’s credit warnings were: Austria, France, Italy, Malta, Portugal, Spain, Slovakia and Slovenia.
Grand Chancellor George Osborne will have to deal with a big slap on his reputation regarding the UK’s capacity to elude the ailing crisis if ever the country will face the possibilities of losing its much coveted credit privileges.
After the Brussels’ decision to reject the handing of over €130bn without further commitments from the Athens parliament, signs of political confusion have become evident as the streets of Athens were saturated with lootings and riots relating to the debts that Greece is currently facing.
As for Chancellor George Osborne, he is anticipated to maintain his stand on narrowing down the British’s “structural deficit” by 2017 when he delivers his third budget after standing in parliament next month since the coalition took the reins in 2010.
Moody’s pointed out its concern that the Chancellor would miss his previous targets to cut deficit by 2015 as its verdict puts more pressure on opposing MPs and having groups of economist urging him to change course.
The AAA credit rating is the highest title that can be awarded to a country which gives it the privilege to be lent money at the lowest possible rates.
Osborne said that Moody’s decision meant the government should stick to its course: “This is proof that, in the current global situation, Britain cannot waver from dealing with its debts.”
The ratings agency has encouraged other western nations experiencing huge debts to focus on programs that will stimulate and enhance economic growth alongside with austerity measures to reduce deficits that accumulated from the financial disaster during 2008.