The Viking ship Fitch Ratings continued it's marauding in the British Isles today, sending shivers throughout the United Kingdom.
Well, maybe not throughout. But certainly in London, the ratings agency's word that the U.K. is the triple-A rated country most at risk of a downgrade was heard loud and clear, as the pound tumbled and the prime minister mumbled.
Fitch didn't exactly say that Britain is about to go the way of Iceland, or even of Ireland. It didn't even cut its outlook, as Standard & Poor's did earlier this year, saying the U.K.'s top credit rating is "resilient." But it did say that the country requires the "largest budget adjustment" of any triple-A rated sovereign. And we all know that you can take a ratings agency at its word.
The British government quickly responded that there was simply no way in hell it would lose its triple-A rating, with Prime Minister Gordon Brown assuring, "we're taking the necessary action to cut the deficit in half."
Fitch did say that Britain "will articulate a stronger fiscal consolidation program next year." It didn't say whether that program would be implemented by Brown, or his Tory successor. Our bet's on the latter.
Pound Falls After Fitch Fires 'Warning Shot' on U.K.'s Rating [Bloomberg]
U.K. Trade Min: AAA Rating 'Absolutely Safe' [WSJ]