Britain’s triple-A debt status at risk because of deficit
THE SORRY state of Britain’s public finances came under renewed fire yesterday after ratings agency Fitch warned that, out of the industrialised nations, the UK is most at risk of losing its coveted triple-A sovereign debt status because of its ballooning public deficit.
Only the hope that the next government will implement radical measures to bring Britain back towards fiscal sustainability is preventing a downgrade from becoming an imminent threat.
The government has had to issue billions of pounds worth of debt to fund a stimulus package to stave off the full impact of the worst post-war recession.
The International Monetary Fund (IMF) forecasts that Britain’s budget deficit will reach 11.6 per cent of GDP in 2009, second only to the United States. And the net debt is forecast by the Treasury to peak at 76.2 per cent of GDP in 2013/14.
Shadow chancellor George Osborne said: “British politicians need to face the facts or face the consequences: higher interest rates, less investment and higher unemployment.”
The Conservatives, who are widely expected to win the general election, have said that they will cut spending and retain the planned 50 per cent income tax on high earners.
Meanwhile, it emerged yesterday that one in five entrepreneurs earning more than £150,000 are planning to flee Britain in favour of softer tax rates abroad, according to specialist business adviser Tenon.