Fitch downgrades US outlook

Fitch has become the third ratings agency to downgrade the outlook for the US, from stable to negative, following a congressional committee’s failure to finalise deficit cuts.

Standard & Poor's moved to downgrade the US' credit rating in August this year from AAA to AA+ following months of political wrangling over deficit cuts. Moody's issued a warning over the US' credit rating in July, threatening to strip the country of its current triple A rating.

Fitch still assigns the US the top AAA grade, but has downgraded its outlook for the economy due to its "declining confidence that timely fiscal measures necessary to place US public finances on a sustainable path will be forthcoming".

Its negative outlook means Fitch is 50% more likely to implement an actual downgrade over the next two years.

Both S&P and Moody's said the congressional committee's failure to agree a plan for the cuts did not merit a ratings downgrade, because the inaction automatically triggers $1.2trn in automatic spending cuts.

US federal debt held by the public will exceed 90% of GDP by the end of the decade, according to Fitch. Gross debt, including local and state governments, will climb to 110% of GDP over the same period.