 "Fitch warns 'fiscal cliff' could cost US its AAA rating")
Ratings firm Fitch said on Wednesday it is more likely to strip the United States of its triple-A status if a political deal is not reached to halt $600 billion of spending cuts and tax hikes set for early next year.
“Failure to avoid the fiscal cliff … would exacerbate rather than diminish the uncertainty over fiscal policy, and tip the U.S. into an avoidable and unnecessary recession,” Fitch said in its 2013 global outlook, published on Wednesday.
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Fitch currently assigns the United States its highest rating but with a negative outlook. Reuters[/caption]
“That could erode medium-term growth potential and financial stability. In such a scenario, there would be an increased likelihood that the U.S. would lose its AAA status.”
Fitch currently assigns the United States its highest rating but with a negative outlook. Peer Standard & Poor’s has already downgraded the world’s biggest economy, lowering the United States to AA+ in August 2011 - a move which appears to have done little to dull the attraction of U.S. bonds for investors.
Fitch added that an agreement on a multi-year deficit reduction plan to stabilise U.S. debt and public finances was likely to see the country keep its triple-A rating.
However, it went on to say that: “failure to put in place a credible fiscal consolidation strategy during 2013 would be likely to result in the U.S. losing its AAA status.”
Reuters