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Fitch warns UK on AAA rating

Fitch warns UK on AAA rating
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Ratings agency Fitch has placed Britain’s AAA rating on ‘negative’ watch two days after finance minister George Osborne delivered a budget speech in which he revealed weaker debt numbers and a reduced growth forecast.

Moody’s stripped the UK of its AAA rating last month.

A UK Treasury spokesman said: “This serves to underline that there are no easy answers to problems built up over many years. But we are, slowly but surely, fixing our country’s economic problems.”

“As the (finance minister) said at the budget: it’s taking longer than anyone hoped, but we’re on the right track,” he added.

Bloomberg’s Nejra Cehic explained the background: “Some recent data has caused concern. Britain’s economy contracted by 0.3 percent in the final three months of last year and jobless claims fell less than economists forecast in February. But neither the government nor the Bank of England believe the UK will have a triple dip recession.”

UK inflation hit a nine-month high in February making it difficult for the central bank to pump more money into Britain’s economy, though many economists have said they still expect the Bank of England to give more help to the stagnant economy..

Reaction was muted with the pound slipped only slightly against the US dollar.

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