– UK economic outlook slumps on eurozone crisis (Guardian, July 31, 2012):
UK may lose triple-A rating if GDP growth continues to disappoint, Moody’s ratings agency warns
The UK’s economic outlook has weakened as a result of the eurozone debt crisis, Moody’s has said in a fresh blow to the chancellor George Osborne.
The ratings agency cut its forecasts for GDP growth, after figures last week showed the UK economy shrank by 0.7% in the second quarter – far more than expected.
Moody’s expects GDP to grow by just 0.4% this year and 1.8% in 2013, which is considerably more optimistic than many economists, who expect the economy to contract this year. Gerard Lyons at Standard Chartered said after the GDP figures were published: “I think it’s inconceivable that there will be positive growth this year.”
Moody’s warned on Tuesday that Britain could lose its triple-A rating if economic growth did not meet expectations, and if the country’s debt burden increased. It said the weaker economic environment could challenge the government’s efforts to reduce debt in the coming years.