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Standard and Poors downgrade UK outlook to negative

Renowned credit rating agency Standard and Poors has today downgraded its rating on the UK to negative. This means that the credit ratings agency believes that the UK economy is in danger of weakening in the short to medium term which could lead to UK debt ratings being downgraded. This is a significant blow for the UK government as the authorities will require further funding which will increase overall debt as the UK economy struggles to recover.

Any reduction in the UK's credit rating will severely impact upon the cost of future credit and also place significant pressure on interest payments on existing debt. This means that there would be less money to spend on the economy, with finance more expensive, which could in due course increase the length of the ongoing recession. As we approach the next UK general election in 2010 this is a significant blow for the Labour government and could scupper their chances of re-election if indeed S&P do downgrade their rating for the UK.

There has been no official reaction from the UK government as yet although we should hear more over the next few days as the reasons behind the negative stance are released into the open.

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