UK debt could damage investor confidence

Date: 18th March 2010

The forthcoming Budget must include strong thrift measures in order to avoid eroding investor confidence.

This is the view of global ratings agency Fitch Ratings, which said the government risks losing its AAA credit score and damaging investor confidence if action is not taken.

Paul Read of investment firm Invesco Perpetual agreed with the report, saying: "The likelihood of the UK losing its AAA rating depends very much on the political will of the government post the general election.

"Whichever political party is successful, we expect the subsequent government to present firm plans as to how it intends to tackle the fiscal deficit."

However, the expert warned that the forthcoming Budget will be "light on details".

This could lead to a degree of uncertainty remaining in the post-election climate.

"As a result, it is too premature for it to be a buying opportunity until we see some clarification post election," he explained

It was announced earlier this month that the Budget will be announced on March 24th.