Bergmann & Co International – UK Coalition Faces Tough Test.
Bergmann & Co International: Dire GDP data for the 2nd quarter shows that coalition faces tough decisions over economy.
“Bergmann & Co International” says that the United Kingdom’s coalition government faces a tough test of its resolve over the austerity measures it introduced in April after data released this week showed the economy effectively flat-lining in the 2nd quarter.
GDP growth came in at a disappointing 0.2%, half the figure expect by the government’s Office for Budget Responsibility (OBR) and prompted “Bergmann & Co International” to caution clients that the country faced losing its AAA credit rating if the trend continued.
“Aside from the fact that the UK is still borrowing more money than it pays back, the situation is exacerbated because the economy isn’t growing enough to pitch in to the fiscal consolidation effort,” said James Carter at “Bergmann & Co International”.
Moody’s, the credit ratings agency, said in March: “We believe that slower growth combined with weaker-than-expected fiscal consolidation could cause the UK’s debt metrics to deteriorate to a point that would be inconsistent with a triple-A rating.”
A “Bergmann & Co International” analyst said, “The government faces intense pressure from various interest groups over the spending cuts and tax increases it introduced but they must stay the course or run the risk of being the bond market’s next target.”
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