Developing: Fitch Ratings on Friday cut the United Kingdom’s top-tier triple-A rating, citing projected weak economic growth.
The U.K.’s rating was downgraded by one notch to double-A-plus but was given a “stable outlook” by the ratings firm.
Fitch said in a statement: “The downgrade of the U.K.'s sovereign ratings primarily reflects a weaker economic and fiscal outlook and hence the upward revision to Fitch's medium-term projections for U.K. budget deficits and government debt. Despite the loss of its 'AAA' status, the U.K.'s extremely strong credit profile is reflected in its 'AA+' rating and the Stable Outlook.”
Fitch is now forecasting that general government gross debt will peak at 101% of GDP in 2015-16 and will gradually decline from 2017 to 2018.
Fitch noted that it had previously warned the U.K. that if it failed to stabilize its debt below 100% of GDP and place it “on a firm downward path towards 90% of GDP over the medium term” Fitch was likely to issue a downgrade.
That happened on Friday.
“Despite the UK's strong fiscal financing flexibility underpinned by its own currency with reserve currency status and the long average maturity of public debt, the fiscal space to absorb further adverse economic and financial shocks is no longer consistent with a 'AAA' rating,” Fitch said in the statement.
U.S. stocks, already trading in the red on Friday, did not react significantly to the news that Fitch had downgraded the U.K.’s credit rating. In mid-afternoon trading, the Dow Jones Industrial average was down about 35 points at 14,502.
The cut to the U.K.’s credit rating came not long after Moody's Investors Service's made a similar move. Meanwhile, Standard & Poor's Ratings Services affirmed its triple-A rating on the U.K. earlier this month.