Economy

China's rating firm downgrades UK credit

(Xinhua)
Updated: 2011-05-24 12:22

BEIJING - China's first domestic rating agency, Dagong Global Credit Rating Co Ltd, on Tuesday downgraded the local and foreign currency long-term sovereign credit rating of the United Kingdom by one level to A+ from previous AA- with "negative" outlook.

Related readings: Dagong Global sees stable outlook for Chinese banking sector

The Chinese rating agency said the downgrade reflected the UK's deteriorating debt repayment capability.

The GDP growth rate of UK in 2010 was 1.3 percent, lower than average growth rate of the world economy, with budget deficit accounting for 9.8 percent of its GDP. The sluggish growth momentum continued in the first quarter of 2011, Dagong said.

The rating agency said the British government's move to revive its economy would not substantially reverse the trend of increasing the government's fiscal deficit and debt burden in the long term.

Dagong predicted the growth rate of UK economy to be between 1.3 percent and 1.5 percent in the next two years. And its budget deficit would exceed the targeted 7.9 percent to 9 percent.

Founded in 1994, Dagong Global is a pioneer in creating credit rating standards on industries, regions and sovereignties in China. The rating agency published sovereign credit ratings in two earlier reports.