Fitch Ratings late on Monday warned the US it may cut its AAA rating if policymakers failed to agree on a “credible plan” to reduce its swelling budget deficit by 2013. There is a “slightly greater than 50 percent chance of a downgrade over a two year horizon,” said Fitch.
The ratings agency downgraded the US outlook from stable to negative after a bipartisan super-committee failed to agree on much needed $1.2trn deficit cutting measures.
“The negative outlook reflects Fitch's declining confidence that timely fiscal measures necessary to place US public finances on a sustainable path and secure the US AAA sovereign rating will be forthcoming,” said a Fitch statement.
Meanwhile, UK chancellor George Osborne will on Tuesday deliver his autumn statement to the House of Commons. Osborne is due to unveil measures which will focus on tackling the increased deficit of almost £30bn.