Last week both Moody’s Investor Services and Fitch Ratings said the emergency Budget is supportive of the UK’s AAA rating.
Kenneth Orchard, Moody's vice president described the Chancellor's measures as "a key step towards reversing the significant deterioration in the Government's financial position that occurred over the past two years."
He says: "The Budget confirmed the UK Government's intention to eliminate the structural current deficit by 2015-16. Successful implementation would return the Government's finances to a more sustainable trend."
However, the ratings agency cautions that there are implementation risks associated with the Budget measures. "The rapid fiscal consolidation will have a strong negative impact on domestic demand, which is assumed to be offset by robust growth in net exports and a decline in private sector net savings," Orchard says. "If these assumptions do not hold up, the decline in the deficit may be lower than assumed."
David Riley, the head of sovereign ratings, says: "The Budget sets out an ambitious deficit reduction path which, if delivered upon, will materially strengthen confidence in UK public finances and its AAA status.
PSigma's Mott says: "The UK would only lose its rating if the populace was unwilling to deal with the austerity measures and we saw rioting in the streets," he says. "But the early signs are this Budget is a common sense approach and the UK is not in danger of losing its AAA rating."
At the time of going to press, S&P said it is still assessing the details of the Budget.
