BRITAIN’S credit-worthiness has a ‘negative outlook’ Moody’s ratings agency declared late on Monday night, shortly after the markets closed in the US.
In the first move by the ratings agency against sterling, Moody’s warned that it considers there’s a 30 per cent chance of the UK losing its AAA rating.
Moody’s added: ‘Any further abrupt economic or fiscal deterioration would put into question the government’s ability to place the debt burden on a downward trajectory by fiscal year 2015-16.
Chancellor George Osborne claimed the comments from the US agency were not a criticism of the Tory-LibDem government’s economic policy.
Instead, he claimed: ‘It was a reality check for the whole political system that Britain has to deal with its debts, that we can’t waver in the path of dealing with our debts.
‘This is yet another organisation – in this case a credit ratings agency – warning Britain that if we spend or borrow too much we’re going to lose our credit rating.’
However, the rating agency said that one of the three main risks to UK’s AAA rating is the slowdown of growth as a result of the spending cuts.
The other two risks, according to Moody’s, are a rise in borrowing costs due to inflation and a new crisis in the banking sector.
Meanwhile, the government’s house price survey – compiled by the Department for Communities and Local Government (DCLG) – confirmed that UK house prices stagnated last year.
Home ownership in England continued to decline according to the English Housing Survey.
The proportion of households living in their own homes fell in 2010-11 to 66 per cent (14.45 million), from 67 per cent in 2009-10.
There was an eight per cent rise in the number renting from private landlords to 3.62 million, or 16.5 per cent of private households.
The number living in council or housing association homes rose too, to 3.8 million or 17.5 per cent of households.
With a rise in mortgage lending to buy-to-let landlords, this proportion has risen steadily to 16.5 per cent of households.
Average weekly rents for private tenants were far higher at £160 than those in the social sector where they were £79.
Housing benefit was paid to 63 per cent of social households and to 25 cent of private tenants.