United States Government loses AAA credit rating from Standard and Poor's

Monday, August 8, 2011

The international credit ratings agency Standard and Poor's has confirmed that the United States Government has had its national credit rating downgraded one full notch from AAA to AA+ in the light of the recent drama concerning the US debt ceiling and the negotiations to have it raised before the August 2 deadline, citing concerns about budget deficits.

In a statement, S&P said that the main reason for the downgrade was that the final deficit reduction bill passed by Congress and the Senate this Tuesday past were insufficient. The potential at this stage is for the downgrade to raise the cost of borrowing for the US Government in the future. It also stands to have a knock on effect for investor confidence, BBC correspondents claim.

Losing its "Triple A" rating for the first time in history is a significant blow to President Barack Obama, leading a country with enormous debt, unemployment at over 9% and the possibility of another recession to follow.

The US Treasury is thought to dispute the downgrade. "A judgment flawed by a $2tn error speaks for itself," an unnamed spokesman said, referring to errors anonymously-speaking officials claim to have identified in S&P's maths. China's national state-owned news org Xinhua said China has "every right now to demand the United States address its structural debt problems and ensure the safety of China's dollar assets." The US is more indebted to China than anyone else.

There are no plans at this time for the other two major credit rating agencies, Fitchs and Moody's, to follow S&P's lead.