When you talk about credit rating, most people think of personal debt and credit, but a credit rating can also apply to countries. For many years Britain has been in the top bracket for international credit rating with a triple a scoring. However, investment firms have said that Britain is most likely to lose this rating due to the current financial crisis and that America may swiftly follow.

Problems with the banks has cost the British tax payer a fortune and UK government debts have been further affected by bail outs, massive social costs and fast falling income tax revenues means that Britain’s national debt will soon be as high as a hundred percent of its gross national product. The prediction is that America is in the same boat, because the cost of war in Iraq and the problems in Afghanistan, along with banks going belly up, have caused huge problems for both these countries.

If Britain loses its top credit rating, and investors seem positive that this will happen, then borrowing both domestically and on the international market will become more expensive. Debt loads in the UK are hitting the greatest high since the post war debt period, more importantly, the worldwide financial system has always seen the US levels of debt as free of risk, but this is no longer the case.
 

Although the warnings about levels of debt in both the United Kingdom and the United States, are not really a surprise to financial experts, it is still sending shocks through financial and business circles, especially as the UK stock index has fallen dramatically and may continue to do so. UK T notes, or ten year gifts have seen a small drop while French and German notes are gaining in value. The value of the pound has dropped and this is likely to continue to affect the treasury.

Experts warn that dollar based assets are being sold off in the face of universal fears that the United States is going the same way as the United Kingdom in financial terms. While the UK is expected to lose its triple A credit rating in the near future, and it is expected that this will also happen to America, experts say that this is not likely to happen soon. In spite of this prediction, it is expected that this year the US fiscal deficit will reach almost two billion dollars. The problems are the same in the US as in the UK, too many bail outs of both financial and other institutions, rising social care costs and diminishing tax revenues as a result of the current, global economic crisis. All of this is not helped by the fact that investors are ignoring the pound and the dollar, in favour of Asia and the Euro zone.