UK rating downgrade 'unavoidable'
A downgrade of Britain's top notch credit rating is potentially unavoidable because the country can not grow out of its debts, a leading asset manager has claimed. (...)
James Carrick, economist at LGIM, said that stimulus spending of about £17bn a year would help lift growth but "hasten" any ratings action. "Under all scenarios, we think the Chancellor will miss his projections," he said.
"We expect the debt-to-GDP ratio to remain on an explosive path no matter what the Government does. [As a result] ratings agencies might negatively review the UK's AAA sovereign rating in coming years."
Mr Carrick said the Government can not meet its growth targets because they require the "biggest private sector boom ever". To compensate for the largest fiscal squeeze since the Second World War, the private sector will have to grow "not just at its fastest rate in one year, but for four in a row". (...)
The Government will miss both its targets of eliminating the structural deficit and having the debt-to-GDP ratio falling by 2015 because tax receipts will decline as unemployment remains high.
http://www.telegraph.co.uk/finance/financialcrisis/8822965/UK-rating-downgrade-unavoidable.html