Moody's strips UK of AAA rating

25 February 2013

Britain has been stripped of its top-notch credit rating due to ongoing concerns about the country's economic recovery.

Moody's Investors Service has announced that it has decided to downgrade the UK's domestic and foreign currency bond scores by one notch from AAA to AA1 because of several primary factors.

For instance, the agency cited the "continuing weakness" in the nation's medium-term growth outlook, which is now expected to extend into the second half of the decade and will continue to have a negative impact on the government's fiscal consolidation programme.

In addition, Moody's pointed towards the fact the nation's "high and rising debt burden" has reduced the "shock-absorption capacity" of the administration's balance sheet, a trend that is deemed unlikely to reverse before 2016.

Nevertheless, the organization added that Britain's creditworthiness remains "extremely high" thanks to a number of strengths such as its "highly competitive, well-diversified economy" and strong track record of fiscal consolidation.

By Gary Cooper

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