Britain's much-prized AAA credit rating will come under fierce scrutiny this
week with official figures expected to show the national deficit running at
least pounds sterling 10 billion over the Government's target.
All of the major rating agencies -- Moody's, Standard & Poor's and Fitch -- have put the UK on "negative outlook," with the figures and the Budget next month tipped as possible trigger points for a downgrade.
Public finance figures due on Thursday cover January, a key month for tax payments. Revenues from taxation have been weaker than expected for some time as a result of the double-dip recession.
"We are about pounds sterling 10 billion above where the Treasury wanted us to be in terms of the deficit," said Trevor Williams, chief economist for Lloyds Bank wholesale markets.
"We do not want the figures to show the gap getting any wider. In terms of our credit rating, we certainly have the potential for losing it."
Dhaval Joshi, managing editor with research group BCA, said: "Monthly figures tend be quite volatile. The question has to be, 'Is the trend improving?' I do not think there has been any sign that this is the case."
Howard Archer, economist with independent consultancy IHS Global Insight, said: "The signs are that the figures will be pretty weak. The economy is struggling and that has hit tax revenues.
"At least one of the credit rating agencies is likely to strip us of our AAA rating."
Archer said lower company tax receipts would mean a slightly smaller surplus this year than the pounds sterling 6.4 billion seen in January 2012, adding that the deficit was likely to be pounds sterling 10 billion above target when the current financial year ends in April.
In February 2010, George Osborne, then in opposition, invited voters to judge the success of a Conservative Government on whether it could defend Britain's AAA credit rating.
Distributed by MCT Information Services
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OCTOBER 30, 2014
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