S&P downgrades UK outlook

S&P downgrades UK outlook

By David Oakley, George Parker and Daniel Pimlott
Published: May 21 2009 10:10 | Last updated: May 21 2009 12:14

Sterling was hit on Thursday after the outlook for the UK economy was thrown into doubt when the country’s sovereign debt ratings were revised from stable to negative by Standard & Poor’s.S&P’s move is highly embarrassing for the Treasury and will give ammunition to the opposition Conservative party, which argues that the government is presiding over a growing and unstable mountain of debt.

Sterling fell 1.2 per cent against the dollar and 1.4 per cent against the euro at one point before recovering. UK shares and bonds also recovered after falling sharply on the S&P announcement.The downgrade of the UK’s outlook came as figures showed that public spending rose and tax revenues fell in April, keeping public sector borrowing on course to reach the dire levels forecast by the government forecast in the Budget. Full Story