Home owners and businesses face having to pay higher interest rates following a downgrade in the credit ratings of Britain’s biggest banks, analysts warned on Thursday.
Moody’s, a leading international ratings agency, on Thursday night cut its scores for Barclays, Lloyds and Royal Bank of Scotland because of the eurozone crisis.
Senior politicians warned the banks not to use the downgrade as an excuse to charge more for borrowing on the high street.
The downgrade coincided with a warning from the CBI, Britain’s biggest business group, that the fragile economic recovery was at risk of being “choked off by a lack of finance”.
Credit ratings help determine what banks must pay to borrow money on international markets. The lower the rating, the higher the interest rates they pay and the more collateral they must offer.
Sources at the big banks played down the impact of any downgrade on Thursday night, insisting that markets were already anticipating the move.
But analysts warned that the costs could still be passed on to families and businesses.
Andrew Tyrie, Conservative chairman of the Treasury select committee, said: “Any increase in the cost of funding would add to the squeeze on banks. The UK needs the banks to recover – we can’t have a full economic recovery without them.
