Coronavirus: Fitch downgrades England’s rating
saturday, 28.03.2020
news-single-imgcaption" style="width:240px">“The political response necessary to contain the Covid-19 epidemic will lead to a sharp increase in the deficit and debt ratios of general government, leading to an acceleration of the deterioration of public finances in the medium term” according to the rating agency.
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The rating agency Fitch Ratings announced Friday that it had lowered the UK’s financial strength rating to AA-, with a negative outlook. It points in particular to a “significant” weakening of public finances caused by the impact of the coronavirus.
The deterioration “reflects the serious short-term damage to the UK economy caused by the coronavirus epidemic and the lingering uncertainty over UK-EU trade relations after Brexit,” Fitch said in a statement.
“The political response necessary to contain the Covid-19 epidemic will lead to a sharp increase in the deficit and debt ratios of public administrations, leading to an acceleration of the deterioration of public finances in the medium term”, the agency said. rating.
Regarding the negative outlook, she said that the uncertainty surrounding future trade relations with the EU could limit the strength of the economic recovery after the crisis.
Dreaded Italian scenario
The coronavirus epidemic has inflicted unprecedented shock on financial markets and economic activity worldwide, as governments strive to contain the pandemic.
The coronavirus has infected nearly 590,600 people worldwide, according to the latest data from Johns Hopkins University. In the UK, more than 14,740 people were infected and 761 people died.
Like other countries, the United Kingdom has had to resolve to shut down entire swathes of its economy in an effort to slow the spread of the disease. These drastic measures will lead to “a deep contraction centered on the second quarter,” adds Fitch.
On March 23, Prime Minister Boris Johnson announced more drastic measures to contain the spread of the Covid-19, including closing all non-essential stores and banning public gatherings of more than two people.
The UK is preparing for a gigantic wave of patients in its hospitals. The country is now engaged in a race against the clock to open thousands of hospital beds in time to avoid submersion resulting in an Italian scenario. (awp)
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