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UK external deficit, competitiveness a worry for long-term rating

© Reuters. FILE PHOTO: Tennis – Wimbledon – All England Lawn Tennis and Croquet Club, London, Britain – June 30, 2022 General view of the skyline of London from Wimbledon REUTERS/Matthew Childs/File Photo
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LONDON (Reuters) – The UK’s external deficit is a worry and there are questions over the country’s competitiveness long-term, although a resilient labour market is a positive, senior analysts at S&P Global (NYSE:) said on Friday.

The ratings agency cut the outlook for Britain’s AA credit rating in September to “negative” from “stable”.

S&P’s top European sovereign analyst Frank Gill told Reuters that the UK’s external deficit was a worry, as was the country’s long-term competitiveness.

“There are long term questions about the competitiveness of the UK economy, … (on) why the weakness of sterling doesn’t seem to have really improved the overall balance of payments position,” said Gill.

S&P chief EMEA economist Sylvain Broyer said that while he expected a recession in the UK to last three to four quarters, a resilient labour market was a positive.

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