UK and Austria in line for possible credit rating downgrades
As the dust starts to settle on the downgrade of Irish national debt by the credit rating agency S&P there are concerns this evening that Britain and Austria could be next on the list. Britain is the only one of the two countries on a negative outlook from S&P and could be in line to lose its valuable AAA rating. The move to reduce the rating on Irish sovereign debt has set a very difficult precedent and one which is striking fear into investment market.
However, when you consider the massive amounts of money which the UK government has ploughed into financial sector, the ongoing budget deficit and enormous funding required for the future, it is easy to see why companies such as S&P are concerned. While the UK government will reiterate its stance that the UK will move out of recession in the latter part of 2009 and the early part of 2010 this is not a belief held by every economic analyst.
Let's not underestimate the impact which a downgrade of UK sovereign debt would have on the finances of the UK, with interest payments increasing substantially, access to funding more expensive than ever before and serious problems going forward.
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