S&P cuts UK outlook to negative

Standard & Poor's (S&P) cut its credit-rating outlook on the United Kingdom to 'negative' from 'stable' though it affirmed the country's 'AAA' sovereign credit rating. "We have revised the outlook on the UK to negative due to our view that, even assuming additional fiscal tightening, the net general government debt burden could approach 100% of GDP and remain near that level in the medium term," S&P credit analyst David Beers said. "We base our opinion on our updated projections of general government deficits in 2009-13. These projections reflect our more cautious view of how quickly the erosion in the government's revenue base may be repaired, the extent to which the growth in government spending can be curtailed, and consequently the pace at which historically high fiscal deficits are likely to narrow," Beers said. Britain’s top-level credit rating is more likely to be cut by S&P, as the government’s finances deteriorate amid the worst recession since World War II. The British government’s budget deficit this year will reach 175 billion pounds (US$273bn), or 12.4% of gross domestic product (GDP). The UK plans to sell a record 220 billion pounds of bonds in the fiscal year through March 2010.