Fitch warns of US downgrade if no budget deal in 2013

New York: Fitch Ratings on Monday revised to negative the outlook on the United States’ AAA credit rating after a Congress committee failed last week to agree on at least $1.2 trillion in deficit-reduction 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,” the ratings agency said in a statement.

The so-called ‘super committee’ six Democrats and six Republicans failed last week to reach an agreement on deficit reduction. It said at the time it could cut the outlook, but that a downgrade was only an outside possibility.

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The committee abandoned its efforts, setting in motion automatic cuts that would result in lowering the deficit by $1.2 trillion over 10 years. The cuts are designed to be split evenly between domestic and military programs.

Fitch Ratings on Monday warned it may cut the United States’ AAA rating if policymakers fail to agree in 2013 on a plan to reduce the country’s ballooning budget deficits.

The ratings agency revised to negative from stable the outlook on the US credit rating after a special congressionalcommittee failed last week to agree on at least $1.2 trillion in deficit-reduction measures.

Reuters