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US government shutdown would be bad for country’s credit rating, Moody’s warns
Live  
US government shutdown would be bad for country’s credit rating, Moody’s warns
Rolling coverage of the latest economic and financial news
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Utilities  
Water firms in England and Wales ordered to cut £114m from bills
Water firms in England and Wales ordered to cut £114m from bills
Brexit  
Senior business leaders back Keir Starmer’s call not to ‘diverge’ from EU
Sick leave  
Number of workers taking absence hits 10-year high
Rail  
Sunak may seek to limit HS2 fallout with new transport projects in north
Technology  
ChatGPT update will give it a voice and allow users to interact using images
Gatwick  
Airport restricts flight numbers for week amid air traffic control problems
Automotive  
Nissan vows to go all-electric by 2030 despite Sunak delay on petrol ban
Technology  
Amazon to invest up to $4bn in OpenAI rival Anthropic
Transport  
Bee Network creates a buzz in Greater Manchester
Hospitality  
Brighton Pier owner hit by spending slowdown and bad weather
Supermarkets  
Aldi reports record UK sales as shoppers change habits in cost of living crisis
‘It felt futile’  
Young Britons swap career-driven lives for family and fun
Today's agenda
The possibility of a US government shutdown is looming over global markets today, and threatening America’s triple-A credit rating.

Overnight, credit rating agency Moody’s warned that dysfunction in Washington DC would reflect negatively on the country’s rating.

Moody’s is the last of the Big Three credit ratings firms that still gives the US a AAA rating with a stable outlook (the gold standard for credit worthiness).

It warned: "A shutdown would be credit negative for the US sovereign.

“In particular, it would demonstrate the significant constraints that intensifying political polarisation put on fiscal policymaking at a time of declining fiscal strength, driven by widening fiscal deficits and deteriorating debt affordability.”

There are just a few days left for Capitol Hill to avert a shutdown, by passing a spending bill by 1 October. If that doesn’t happen, the federal government will be left without funding.

That is expected to force hundreds of thousands of federal workers to go without pay and bring a halt to some crucial government services.

Moody’s analyst William Foster told Reuters: “If there is not an effective fiscal policy response to try to offset those pressures ... then the likelihood of that having an increasingly negative impact on the credit profile will be there.

"And that could lead to a negative outlook, potentially a downgrade at some point, if those pressures aren’t addressed.”

But there is deadlock in Washington DC, where a group of rightwing Republican members of the House of Representatives are refusing to reach a compromise with their own party’s leadership over a spending bill.

Moody’s predicts that a shutdown would probably be shortlived, and likely not to affect government debt service payments.

But the row is focusing investors’ attention on US creditworthiness, at a time when the interest rates on sovereign bonds are rising on fears that interest rates will stay higher for longer than hoped.

Kyle Rodda, a senior financial market analyst at Capital.com, says: "While what these agencies rate most government debt means diddly-squat, it does say something about the dysfunction in the US government …

Moody’s warning is a reminder of the costs of an unstable government."

Just last month, Fitch downgraded the US government’s top credit rating, blaming the “steady deterioration in standards of governance”, after the row over lifting the US debt ceiling.

Meanwhile, Gatwick, the UK’s second largest airport, is expected to announce details of flights which are being cancelled this week due to a shortage of staff in air traffic control.

Thousands of passengers flying to and from Gatwick this week are expected to suffer disruption, after it imposed an immediate cap on Monday of 800 flights taking off or landing a day.

The airport said it would share the total of 164 cancellations proportionately between airlines until Sunday, with easyJet passengers most likely to be affected given the carrier operates just under half of all Gatwick flights.

People travelling on Friday are most likely to be hit, with 865 flights scheduled to depart.

The agenda
• 8am BST: European Central Bank chief economist Philip Lane speaks at the conference Monetary Policy Challenges for European Macroeconomies.
• 2pm BST: US house price index for July
• 3pm BST: US consumer confidence for September

We’ll be tracking all the main events throughout the day ...
Nils Pratley on finance
The next UK net zero battleground is electricity pylons
The next UK net zero battleground is electricity pylons
 

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Opinion
Even HS2’s defenders are abandoning it. Rishi Sunak, it’s time to follow suit
Simon Jenkins
Even HS2’s defenders are abandoning it. Rishi Sunak, it’s time to follow suit
Explainer  
Why has HS2 ended up being so expensive?
Abolishing HS2 and inheritance tax? Rish! would not speculate on speculation he started
John Crace
Media
UK  
Police in London launch investigation into allegations against Russell Brand
Police in London launch investigation into allegations against Russell Brand
‘Exceptional’  
Hollywood writers hail tentative deal to end strike
Spotlight
The trade in sanctioned oil is booming as the US turns a blind eye
Sanctions  
The trade in sanctioned oil is booming as the US turns a blind eye
Analysts say that the rise in the movement of oil in contravention of western sanctions is often happening with the full knowledge of the US government
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