- Considerable uncertainty surrounding the economy’s potential output and scope for a period above trend economic growth
- Outlook reflects declining confidence in government’s ability to put finances on sustainable path
- Debt reduction plan after 2012 election would relieve downward pressure on rating
- Failure to act on deficit reduction by 2013 would likely result in a downgrade
- Without material adverse shock, negative outlook not expected to be resolved until 2013
Very little market reaction: EUR/USD at 1.3315.