Fitch Ratings has downgraded the outlook for Britain after saying that the nation could lose its AAA rating because of a limited ability to deal with financial shocks. The move comes just days before the annual budget is to be revealed.
Bloomberg reported that Fitch took the action late Wednesday, changing the U.K.’s long-term outlook from stable to negative, which indicates a chance “slightly greater” than 50% that its AAA rating will be reduced within two years. In its statement, the ratings agency cited the ongoing threat from the euro zone debt crisis, Britain’s weak economic recovery and high debt levels.
In its statement, Fitch said its action “reflects the very limited fiscal space to absorb further economic shocks in light of such elevated debt levels and a potentially weaker than currently forecast economic recovery.”