Fitch maintained the United Kingdom’s triple-A credit rating but cut its outlook to negative from stable, due to concerns over the size of the U.K. budget deficit.
The change in outlook from Fitch late on Wednesday follows from Moody’s similar move last month when it too cut the U.K.’s outlook.
Fitch also cited concerns regarding the U.K.’s close ties to euro-zone economies. The crisis in the region could hurt the UK economy and could put pressure on the British government’s ability to meet deficit reduction targets. The ratings agency warned that the U.K. now has a 50 percent chance of losing its coveted AAA rating in two years.
Fitch noted the U.K.’s structural budget deficit is second only in size to the U.S., and the country’s debt level is above the median for other triple-A-rated countries.
The revision in the U.K.’s outlook by Fitch comes just before Chancellor of the Exchequer George Osborne presents his annual budget on March 21. The Fitch announcement could come as a blow to Osborne’s strategy of implementing the biggest squeeze on government spending since World War II.