BUSINESS
03/24/2011 08:42 am ET Updated Dec 06, 2017

England's Slowing Economy Could Lead To Downgrade: Moody's

(Reuters) - Britain's triple-A sovereign debt rating could be at risk if slower economic growth makes it harder for the government to rein in its budget deficit, ratings agency Moody's said on Thursday.

"The government's ongoing commitment to large-scale deficit reduction is very important to the Aaa rating and stable outlook," Moody's said the day after finance minister George Osborne revealed downgraded growth forecasts in his 2011 Budget.

"Although the weaker economic growth prospects in 2011 and 2012 do not directly cast doubt on the UK's sovereign rating level, we believe that slower growth combined with weaker-than-expected fiscal consolidation could cause the UK's debt metrics to deteriorate to a point that would be inconsistent with a AAA rating," Moody's said in a statement.

Moody's downgraded its own forecast for British growth this year to 1.6 percent from 2.0 percent, below the 1.7 percent forecast by the government's independent Office for Budget Responsibility in Wednesday's Budget.

Preserving the triple-A sovereign debt rating that Britain enjoys from the major ratings agencies is a top economic priority for the country's coalition government of Conservatives and Liberal Democrats.

Britain's budget deficit totaled around 11 percent of gross domestic product in the 2009/10 fiscal year.

(Reporting by David Milliken)

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