Moody’s warns UK faces “formidable and rising challenges”
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Moody’s has warned the UK is facing a raft of “formidable and significant challenges” and that the eurozone crisis could hold back growth and weaken the Government’s debt cutting plans.
In its annual guidance for investors, the ratings agency says although the UK scores highly for economic governance, its current AAA rating is likely to be sensitive to future developments in the eurozone area.
It says: “A need to support the banking system could temporarily set back the government’s fiscal consolidation efforts. As a result, the outlook on the rating is likely to be sensitive to future developments in the euro area’s debt crisis, even though the UK is not a member of the monetary union.”
Moody’s says the UK has “significant structural strengths” and deserves to retain its AAA rating. The ratings agency cites long-term economic fundamentals and institutional and government financial strength.
The ratings agency recently placed all the credit ratings of eurozone countries under review.
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