Fitch Ratings latest: "Western Europe Sovereign Credit Overview - 2Q18"
Three key drivers of Western European sovereign ratings,
- Public debt dynamics
- macro outlook
- politics
Interplay of strong growth and improving public finances underpins positive near-term rating momentum
- but reducing debt is a long-term challenge and may be hampered by political developments
The rating momentum for Western European sovereigns is positive
- Since October 2017, there have been six rating upgrades (Cyprus, Greece, Iceland, Ireland, Portugal, Spain) and no downgrades.
- Three countries are on Positive Outlook (Andorra, Cyprus and Greece), indicating that an upgrade is likely over a one- to two-year horizon
- The United Kingdom remains the only country on Negative Outlook, reflecting the uncertainty and corresponding downside risks following the decision to leave the European Union
Fitch does caution - difficult to foresee current western European sovereign upward rating momentum being sustained without bigger reduction in government debt burdens over time
