Bank of England avoids downgrade

Fitch Ratings has affirmed the Bank of England’s (BoE’s) AAA rating but given the central bank a negative outlook, following a similar action on the UK’s sovereign debt.

Fitch announced earlier this week that the UK has a greater than 50% chance of a downgrade over the next two years, yet the ratings agency affirmed the Bank of England’s rating based on its sovereign support.

“The BoE’s ratings reflect its central role in the UK and international financial system. They remain underpinned by support from the ’AAA’-rated UK sovereign,” according to Fitch.

“The near certainty of sovereign support for the BoE derives primarily from its national strategic importance, as well as its ownership by the UK Treasury.” (article continues below)

In its statement on the BoE, Fitch reiterated the threats facing the UK economy. With a structural budget deficit second only to the US, Fitch says the outlook downgrade reflected the “very limited fiscal space to absorb further adverse economic shocks”.