UK Downgrade: The impact of ratings downgrades
What does this mean?This implies the UK has a 30% chance of losing its AAA credit rating within 18 months, compared to ‘negative watch', when there is a 50% chance of a downgrade. France and Austria have also been warned and Italy, Spain and Portugal's ratings have been lowered.
The agency said the UK faced three main risks to its top rating; slower growth and the possible impact on spending cuts, a sharp rise in borrowing costs due to inflation or a new crisis in the banking sector.
But what are sovereign credit ratings?
Like personal credit scores these ratings are an indication of how risky it is to lend money to a country. A high credit rating from the three main agencies, Moody's, Standard & Poor's and Fitch, implies that borrowing to fund public spending will be relatively cheap - just like if you have a top-notch rating when applying for a mortgage you'll have access to the best rates.
