<div style="text-align: justify; "><span style="font-size: 1rem;">The US government's credit rating has been downgraded following concerns over the state of the country's finances and its debt burden.</span><br></div><div style="text-align: justify;"><br></div><div style="text-align: justify;">Fitch, one of three major independent agencies that assess creditworthiness, downgraded it from the top rating of AAA to AA+.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">Fitch said it had noted a "steady deterioration" in governance over the last 20 years.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">Treasury Secretary Janet Yellen called the downgrade "arbitrary".</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">It was based on "outdated data" from the period 2018 to 2020, she said.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">Investors use credit ratings as a benchmark for judging how risky it is to lend money to a government. The US is usually considered a highly secure investment because of the size and relative stability of the economy.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">However, this year saw another round of political brinkmanship over government borrowing.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">In June the government succeeded in lifting the debt ceiling to $31.4 trillion (£24.6 trillion) but only after a drawn-out political battle, which threatened to push the country into defaulting on its debts.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">"The rating downgrade of the United States reflects the expected fiscal deterioration over the next three years, a high and growing general government debt burden, and the erosion of governance" relative to peers, said Fitch in a statement.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">"In Fitch's view, there has been a steady deterioration in standards of governance over the last 20 years, including on fiscal and debt matters, notwithstanding the June bipartisan agreement to suspend the debt limit until January 2025," the rating agency said.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">Ms Yellen said she "strongly" disagreed with Fitch's decision.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">"Treasury securities remain the world's preeminent safe and liquid asset, and... the American economy is fundamentally strong," she said in a statement.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">The timing and rationale behind the downgrade has taken many economists by surprise.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">Former US Treasury Secretary Larry Summers said Fitch's decision is "bizarre and inept," particularly as the US economy "looks stronger than expected," he said in a post on Twitter, now known as X.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">Mohamed El-Erian, the chief economic adviser at financial services giant Allianz, said the Fitch announcement was "a strange move".</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">"This announcement is more likely to be dismissed than have a lasting disruptive impact on the US economy and markets," he posted on the Threads social media platform.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">Fitch also said it expects the US to slip into a mild recession later this year.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">However, Nobel Prize-winning economist Paul Krugman said "the biggest economic news over the past year has been America's remarkable success at getting inflation down without a recession". BBC</div><div style="text-align: justify;"><br></div><div style="text-align: justify; ">bnbd24/kh</div>