Fitch says it could downgrade U.S. rating

Fitch Ratings says it could mark America’s sovereign and long-term credit rating down from AAA if U.S. politicians don’t raise the debt ceiling.

Read: Senate leaders nearing agreement to fully reopen government

“Although Fitch continues to believe that the debt ceiling will be raised soon, the political brinkmanship and reduced financing flexibility could increase the risk of a U.S. default,” the firm said in a statement yesterday.

The U.S. is now on the company’s “Rating Watch Negative” list. Today is the last day Congress and the Senate have to agree to raise the debt ceiling before the U.S. Treasury begins to run out of funds.

Read: Moody’s considers downgrading U.S. banks

Without a deal it will be a matter of days before the government runs out of money to finance programs and the national debt. It would have to pay its bills with incoming revenue and reserves.

Fitch notes the constant haggling over the debt ceiling, currently at $16.7 trillion, calls the U.S. dollar’s status as the primary global currency into question.

“Our assessment of the prospects for further deficit-reduction measures in future years necessary to contain government deficits in the face of long-term spending pressures and place public debt on a downward path over the medium to long term,” it adds.

Read: UK credit rating suffers another downgrade

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.