View more on these topics

Budget 12: No impact on rating, says Fitch

Yesterday’s Budget had no impact on the safety of the UK’s AAA credit rating from Fitch.

Earlier this month Fitch cut the UK’s rating outlook from stable to negative, warning that the economy would struggle to absorb unexpected shocks.

The agency says yesterday’s “fiscally neutral” Budget contained no unfunded tax cuts or spending promises, confirmed the Government’s commitment to deficit reduction and was bolstered by a slight improvement in growth projections from the Office for Budget Responsibility.

In a statement Fitch says: “The 2012 Budget does not impact Fitch’s assessment that the UK’s ’AAA’ sovereign rating is warranted but is vulnerable to adverse shocks.”

“However, the scale of the fiscal challenge remains large relative to its ’AAA’ peers.”

It will come as good news to Chancellor George Osborne who has put a lot of weight on claims his restructuring of public finances will command the confidence of the markets. He has announced policies like the National Loan Guarantee Scheme that in part rely on the UK Government being able to access low interest rates on the money markets.

The OBR now predicts gross government debt will peak at 92.7 per cent of GDP in 2014/15, compared to its November estimate 93.9 per cent. Fitch says it expects gross debt to peak at over 90% of GDP in 2014/15 before gradually declining.

The statement says: “Retaining the ’AAA’ status is conditional on debt stabilising by the middle of the decade and declining in the foreseeable future to below 90%.”

Recommended

2

Budget 12: Gov’t to introduce £140 single-tier state pension

Chancellor George Osborne has given the green light to proposals to introduce a single-tier state pension worth around £140 a week for future retirees. In his Budget speech today, Osborne (pictured) paid tribute to Liberal Democrat pensions minister Steve Webb as he confirmed the Coalition will press ahead with the reforms. He said further details […]

Budget 12: Personal allowance up to £10k by 2014

The tax-free personal allowance will rise to £10,000 by April 2014, a year earlier than previously planned. The Coalition Agreement commits the Government to raise the allowance to £10,000 by the end of the Parliament, in 2015. According to the BBC,Chancellor George Osborne will announce in ths afternoon’s Budget that pledge will be delivered in […]

1

EEA outlines plans to restructure life settlement fund

EEA fund management has sent a letter to investors highlighting three potential restructuring plans for its life settlement fund. EEA was forced to suspend dealing in its life settlement fund on November 28, 2011, after receiving unprecedented levels of redemptions from advisers and institutional investors. The move came after the FSA labelled life settlement funds […]

Budget 12: Chancellor confirms the launch of long-dated gilts

The Chancellor has confirmed the Government is looking at issuing bonds with over 50 years maturity and perpetual gilts. Speaking in today’s Budget, Osborne says: “The debt management office is looking at bonds with over 50 years maturity and perpetual gilts, which Britain last did six decades ago.” Perpetuals bonds pay interest indefinitely, with the […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment