Credit rating agency Standard & Poor’s has cut New Zealand’s rating from AA plus to AA, after a similar downgrade by rival agency Fitch this morning.
S&P has had New Zealand on negative outlook since late last year.
It said it downgraded the rating because of the likelihood that New Zealand’s external debt would get worse when the government is having to spend more as a result of the Canterbury quake.
This is a blow. It means all businesses and of course the Government will have to pay a bit more to borrow money. This is the price we pay for having kept interest free student loans – everyone else pays more interest.
This makes it even more imperative that the NZ Govt gets back into surplus as fast as possible. I hope both major parties do not use the election period to make spending promises we can’t afford, or in Labour’s case tax cuts for all we can’t afford.