NEW YORK Nov 14 Moody's Investors Service will
revisit the United Kingdom's Aaa rating in early 2013, the
credit rating agency said on Wednesday, warning about the weak
economy and the euro zone's debt crisis.
The rating and its negative outlook are underpinned by
"significant structural strengths," Moody's said in a statement
on its annual credit report on the UK. Those strengths include a
"very favorable debt structure," said Sarah Carlson, a senior
credit officer with Moody's sovereign risk group.
Other positives include "the fact that the country has a
large, diversified, highly competitive economy, a very flexible
labor force, and its track record of structural reform," she
But government efforts to cut the debt "are being hampered
by weaker economic prospects as well as by the risks posed by
the ongoing euro area sovereign debt crisis," the Moody's
"Although these challenges are currently reflected in the
negative outlook on the UK's sovereign rating, Moody's will
revisit the Aaa rating and outlook in the first few months of
2013 to assess the impact of these challenges and of the
government's upcoming autumn Statement," Moody's added.
A weaker macroeconomic environment will complicate the
government's ability to raise revenues and increase the risk
that the country's debt metrics will not stabilize within the
next three to four years. That uncertainty was the main driver
for Moody's move to drop the outlook to negative in February.
"In Moody's opinion, the UK government's most significant
policy challenge is balancing the need for fiscal consolidation
against the need for economic stimulus," the firm said.