Concerns over significant national debt problems have caused Standard and Poor, a leading credit rating agency, to revise its outlook for the UK economy. For the first time in more than 30 years, it has down-graded it’s rating of the UK economy from stable to negative.
The down-grade was announced as the true scale of the country’s debt problems became apparent, when figures confirmed that UK borrowing is now out of control, as it rose to more than £8.4 billion last month. In the opinion of Standard and Poor, this demonstrated a faster than expected deterioration of the nations finances.
According to figures released by ONS (the Office for national Statistics), government borrowing increased to nearly £8.5 billion last month compared to just under £1.9 billion for the same period in 2008. The UK’s finances have suffered from the effects of the recession, with more people claiming benefits, as unemployment increases, and a decrease in tax receipts, as firms have shut down, or cut back on production.
The problems faced by the government mirror the general financial health of the nation, where record levels of personal debt have left many UK citizens seeking debt advice, or embarking on debt management programmes or other debt solutions such as an IVA or a Trust Deed.
These options are, of course, not open to the government and they will have to pay back the enormous debt that has been run up by increasing taxes and cuts in public spending; neither of which are likely to be very popular with the general public.
S&P did not reduce the official rating of the UK, which remains at triple-A, however they said that the rating was at risk of being down graded unless the government came up with a workable plan that would see a significant debt reduction, by the next government. Despite the fact that S&P left the rating at tripe-A, the statement from S&P saw the pound fall against the dollar, by 3 cents.
