The terrible GDP figures released today and deepening eurozone crisis mean the UK could lose its AAA-rating in short order, the FT reports.
In February, Moody’s placed the UK on negative outlook for a downgrade — meaning a downgrade could come in 12-18 months. At the time, Moody’s said:
The “primary driver” underlying the decision “is the weaker macroeconomic environment, which will challenge the government’s efforts to place its debt burden on a downward trajectory over the coming years.”
Opposition to austerity is mounting in the UK and growth is floundering. A downgrade wouldn’t have an effect on borrowing costs but it would trigger a knee-jerk drop in GBP.Before that happens, the next step would be for Moody’s to place the UK on creditwatch negative and that could come sometime in the fall.
On the Olympic theme, which I talked about earlier in the month, a report is out saying that local stock markets don’t tend to get any lift around the time of the Olympics.
