Cable Slumps As Fitch Places UK On Rating Watch Negative

Tyler Durden's picture


Based on the the budget, Fitch has placed the United Kingdom's AAA taing on Watch Negative (for future downgrade):

The RWN reflect the latest economic and fiscal forecasts published by the Office for Budget Responsibility (OBR) that indicate that UK government debt will peak later and at a higher level than previously expected by Fitch.

GBPUSD snapped 50 pips lower but is reverting a little now - US equities shrug (just another piece of AAA collateral nearer biting the dust).




Fitch Ratings-London-22 March 2013: Fitch Ratings has placed the United Kingdom's (UK) 'AAA' Long-term Issuer Default Ratings (IDR) on Rating Watch Negative (RWN) indicating a heightened probability of a downgrade in the near term. Fitch expects to complete its review of the UK's sovereign ratings by the end of April. The UK's Short-term IDR of 'F1+' and Country Ceiling of 'AAA' are unaffected.

The RWN reflect the latest economic and fiscal forecasts published by the Office for Budget Responsibility (OBR) that indicate that UK government debt will peak later and at a higher level than previously expected by Fitch. General government gross debt (GGGD) and public sector net debt are forecast by the OBR to peak in 2016-17 at 100.8% and 85.6% of GDP and only begin to decline in 2017-18. Fitch has previously stated that GGGD failing to stabilise below 100% of GDP and on a firm downward path towards 90% over the medium term would likely result in a downgrade of the UK's sovereign ratings.


The RWN reflects the following factors:

- The upward revision by the OBR of its projections for GGGD above 100% of GDP in 2015-16 before declining as a share of national income in 2017-18. This compares with Fitch's own projections published in September 2012 that envisaged GGGD peaking at 97.3% in 2015-16.

- Since it last affirmed the UK's 'AAA' IDRs, Fitch has revised down its forecasts for economic growth in 2013 and 2014 from 1.5% and 2.0% to 0.8% and 1.8%, respectively. These forecasts were published 15 March and are broadly in line with the OBR's latest forecasts. The persistently weak performance of UK growth, in part due to European growth, has increased uncertainty around the UK's potential output and longer-term trend rate of growth with significant implications for public finances.

The UK's creditworthiness continues to be underpinned by its high-income, diversified and flexible economy - underscored by the rise in employment despite the tepid economic recovery - and the authorities' commitment to deficit reduction. The independent monetary policy framework, as well as sterling's reserve currency status, and the long average life of government debt are further rating strengths.

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Fri, 03/22/2013 - 13:16 | 3362739 swissaustrian
Fri, 03/22/2013 - 13:24 | 3362775 McMolotov
McMolotov's picture

"Freedommmmmm (bitchezzzzzzz)!!!"

Fri, 03/22/2013 - 13:31 | 3362809 Zer0head
Zer0head's picture

The rules include a spending limit of £1.5-million, or $2.3-million, for the Yes and No campaigns, and a drop in the voting age to 16.

Fri, 03/22/2013 - 13:46 | 3362888 Dr Paul Krugman
Dr Paul Krugman's picture

So much for austerity.

Fri, 03/22/2013 - 14:02 | 3362935 Yen Cross
Yen Cross's picture

   Krugman the BoE has been pumping the pounds into the economy. They are being strangled by inflation you buffoon. The actual unemployment rate in the UK is LOW! Go feed your CAT.

Fri, 03/22/2013 - 14:09 | 3362990 Dr Paul Krugman
Dr Paul Krugman's picture

Osborne isn't spending!

Fri, 03/22/2013 - 14:40 | 3363131 Yen Cross
Yen Cross's picture

    The UK just voted to keep their (asset purchases program @ 375b pounds) at current levels when analysts thought they would cut it back. I didn't say anything about QE.

Fri, 03/22/2013 - 21:05 | 3364593 Buck Johnson
Buck Johnson's picture

Thats because of two things, the numbers are manipulated and most of the workers are working part time and/or lower pay.  The UK is having major financial problems that haven't came out yet.

Fri, 03/22/2013 - 14:28 | 3363083 EmmittFitzhume
EmmittFitzhume's picture

Krugman must have the day off from indoctrinating students at Princeton.

Fri, 03/22/2013 - 13:49 | 3362905 Diplodicus Rex
Diplodicus Rex's picture

The plan to let 16yr olds to vote is a sign of utter, utter desperation. Of course, they came up with that ruse before the last couple of exposes showing that economically we'd be fucked if independent. That didn't go down to well. However, they have got a hold o the tiger's tail now and can't let go. They're going to have to go through with it. I've yet to meet anyone who says they are going to vote yes.

Fri, 03/22/2013 - 13:25 | 3362780 css1971
css1971's picture

Hmm, Pound or Euro? Choices choices.

Fri, 03/22/2013 - 13:42 | 3362857 Diplodicus Rex
Diplodicus Rex's picture

Either means more of the status quo. When they start talking about a new currency backed by something hard and tangible then I'll take notice. Until then I shall continue throwing rotten tomatoes at Salmond.

Fri, 03/22/2013 - 13:57 | 3362940 max2205
max2205's picture

AAA...what a joke

Fri, 03/22/2013 - 14:02 | 3362966 earleflorida
earleflorida's picture

could i have a pound of euro sliced thin,...

Fri, 03/22/2013 - 13:16 | 3362740 magpie
magpie's picture

EU just making sure the "money laundering" is not transfered from island to island.

Fri, 03/22/2013 - 13:26 | 3362784 machineh
machineh's picture

To paraphrase a legendary British headline:


Fri, 03/22/2013 - 13:17 | 3362741 Yen Cross
Yen Cross's picture

    Good they deserve it. The new budget does nothing to solve UK financial woes.

    BBC News - Budget 2013 at a glance: George Osborne's key points

Fri, 03/22/2013 - 13:40 | 3362847 Diplodicus Rex
Diplodicus Rex's picture

Who's this "they" of whom you speak?

Fri, 03/22/2013 - 13:43 | 3362868 Diplodicus Rex
Diplodicus Rex's picture

Yen Cross,

Where you have CNBC, we have the BBC. A more corrupt and vile organisation you will never meet. Goebbels was a complete and outright amateur compared to Auntie Propaganda.

Fri, 03/22/2013 - 13:47 | 3362884 Diplodicus Rex
Diplodicus Rex's picture

Wow, I see the serial downticker is at work with a vengance. That's got to be a bot. No-one could be that analy retentive.

Fri, 03/22/2013 - 13:53 | 3362919 Yen Cross
Yen Cross's picture

    I agree the BBC is the sister station of CNN, but the breakdown of the new UK budget was broken down pretty well. Yes, we apparently have a serial 'down voter'. They must be getting paid by the click. :-)

Fri, 03/22/2013 - 19:20 | 3364296 Jack Burton
Jack Burton's picture

"Diplodicus Rex" I am a yank, but have spent much time in the UK over the past 3 decades. I am so old now that I remember as a kid buying a short wave radio in order to listen to the BBC. Well, I agree with you, the BBC has become a stomach churning lie machine. Almost unbelievable in the degree to which it will go to support the USA war machine and the global Neo-Liberal Economic project. Vile is a good word to describe this gang of liars and whores of the world elite bankers and global attack on humanity in general.


Fri, 03/22/2013 - 13:22 | 3362767 machineh
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New 'ratings waterfalls' busting out all over.

Dutchboy, dike, etc.

Fri, 03/22/2013 - 13:22 | 3362769 ParkAveFlasher
ParkAveFlasher's picture

I still get my castle, don't I?

- average English citizen

Fri, 03/22/2013 - 13:24 | 3362781 the not so migh...
the not so mighty maximiza's picture

Jolly good show

Fri, 03/22/2013 - 13:26 | 3362788 FuzzyDunlop21
FuzzyDunlop21's picture

Not even a nuclear blast is touching ES today. It dont give A FUCK

Fri, 03/22/2013 - 13:26 | 3362789 WTF_247
WTF_247's picture

Possible downgrade??  Oh - strong buy for stocks - algos gearing up for all in ramp.

Fri, 03/22/2013 - 13:30 | 3362807 Byte Me
Byte Me's picture

No-one could have seen that coming.

Fri, 03/22/2013 - 13:32 | 3362812 SmallerGovNow2
SmallerGovNow2's picture

Heil Merkel!!!


Angela Merkel, the German Chancellor, warned Cyprus this morning that it had to abandon an economy built on a financial sector, fuelled by Russian cash, which is eight times larger than Cypriot GDP.

"It must realise its current business model is dead," she said

Chancellor Merkel cautoned Cyprus against "exhausting the patience of eurozone partners" and rejected its plan to raise €2 billion by nationalising pension funds.

Fri, 03/22/2013 - 13:32 | 3362819 The Invisible Foot
The Invisible Foot's picture

'UK government debt will peak later and at a higher level than previously expected by Fitch." Go fuck yourself credit agency's. -Me

Fri, 03/22/2013 - 13:39 | 3362839 realtick
realtick's picture

and there's this:

British gas reserves could run dry in 36 HOURS after freezing householders turn the heating up

Fri, 03/22/2013 - 13:44 | 3362875 Diplodicus Rex
Diplodicus Rex's picture

Makes me glad I installed a wood-burning boiler connected to the central heating system 4 years ago after the first market murmurings.

Fri, 03/22/2013 - 14:01 | 3362959 Overdrawn
Overdrawn's picture

Thank you Fitch, I was massively short on cable and now I have enough money to panic about a levy being imposed on my bank deposits over the weekend.   Lifes a bitch.

Fri, 03/22/2013 - 14:10 | 3362992 ziggy59
ziggy59's picture

The Masked Junker junks again, I see..

Fri, 03/22/2013 - 14:11 | 3362998 earleflorida
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who would'a thunk it, that a pimple would turn into a boil? 

Fri, 03/22/2013 - 14:12 | 3363007 ziggy59
ziggy59's picture

So, will Fitch be warned not to warn on these matters? Only the Shadow (govt) knows...

The saga continues...

Fri, 03/22/2013 - 14:32 | 3363097 virgilcaine
virgilcaine's picture

Equties to close red...on this.

Fri, 03/22/2013 - 14:34 | 3363100 Kreditanstalt
Kreditanstalt's picture

Well, that's what decades of socialism - by all three political parties - do to you...

"Tax the rich!" ~ until there aren't any more of them.

Fri, 03/22/2013 - 15:09 | 3363254 smacker
smacker's picture

Spot on :-)

Fri, 03/22/2013 - 14:54 | 3363192 Frozen IcQb
Frozen IcQb's picture

Credit rating down, pound up. Makes sense!  Uh ...I think?

Fri, 03/22/2013 - 16:03 | 3363546 robertocarlos
robertocarlos's picture

Why is GPBSUD called cable?

Fri, 03/22/2013 - 18:36 | 3363968 Frozen IcQb
Frozen IcQb's picture

Transatlantic telecomunication "Cable" : GBP.USD

"Fiber": EUR.USD        "Yuppy": EUR.JPY


Fri, 03/22/2013 - 16:38 | 3363666 Stuck on Zero
Stuck on Zero's picture

Proof that everyone hates the Cable Guy.


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