Moody’s credit agency backs George Osborne’s austerity measures.
Chancellor George Osborne’s economic austerity measures received a boost yesterday when the credit rating agency Moody’s announced that the UK will keep its AAA credit rating.
The agency – one of the three top credit rating agencies in the world – said there was still a risk the country would be downgraded but that, for the time being, it would hold on to the top rating as a result of the coalition government’s programme of cuts. Moody’s believes the UK economy is strong enough to withstand the austerity measures.
The Moody’s rating was based on the belief that the UK economy would remain in growth during the period of austerity, and that this period would come to an end in 2014. The agency warned, however, that slow economic growth or reduced political commitment to debt reduction would pose a risk to the AAA rating.
Kenneth Orchard, Moody’s lead analyst for the UK, told The Guardian: "The global financial crisis of 2008-09 caused serious long-term damage to the British government’s balance sheet. The country’s economic outlook is also more challenging because private sector deleveraging, the uncertain state of the financial sector and slower growth in the UK’s main trading partners are not conducive to allowing GDP growth to return to its pre-crisis trend rate.
"Nevertheless, Moody’s believes that the UK has the wherewithal and ability to meet these challenges whilst maintaining its AAA rating."