Major European rating agencies downgrade US sovereign credit rating

Berlin, October 25th (Xinhua) -- European credit rating agencies recently released a report, downgrading the US sovereign credit rating from "AA" to "AA -", due to the continuous deterioration of the US public finance situation and the decline in government governance standards.

The agency stated that the continued deterioration of the US public finances is mainly reflected in the persistently high fiscal deficit, rising interest expenses, and limited budget flexibility. These factors collectively contribute to the sustained increase in government debt levels. The report predicts that without substantial reforms, the US government debt to GDP ratio will rise to 140% by 2030, far higher than most sovereign countries.

The report points out that the decline in government governance standards is also an important reason for the rating downgrade. The agency believes that the increasing concentration of executive power in the United States, coupled with the Trump administration's repeated disregard for court orders, challenges to judicial authority, and evasion of congressional oversight, has reduced the predictability and stability of policy-making and increased the risk of policy errors. The uncertainty demonstrated by the United States in tariff negotiations with its major trading partners is an example.

The agency also stated that the outlook for the US rating is "stable", and the risks of rating upgrades and downgrades are generally balanced in the next 12 to 18 months. The report stressed that downside risks include the continuous rise in debt levels and the possible significant weakening of the US dollar as a global reserve currency, leading to a decline in global demand for US treasury bond bonds.

The headquarters of the rating agency is located in Berlin, Germany, and it will become the first European credit rating agency to be recognized by the European Central Bank in 2023. In the credit rating system of this institution, there are two levels above "AA".