LONDON, Nov 4 (Reuters) – The Democratic sweep of the US midterm elections is positive for the country’s sovereign credit rating, Europe-based credit rating agency Scope Ratings said on Wednesday.
Scope’s executive director for sovereign and public sector ratings, Eiko Sievert, said the Democrats gaining control of both the House and the Senate — and US President Donald Trump’s swift acceptance of Republican defeats — confirmed the resilience of US “checks and balances”.
• Scope said the rebalancing to some extent of the distribution of power between the White House and Congress was “credit positive” and supported the US’ AA- rating and its “stable” outlook
• Looking ahead, a Democratic-controlled Congress will close most legislative routes for the Trump administration, raising the stakes of annual budget negotiations and severely constraining the administration’s ability to implement its domestic policy agenda
• Nevertheless, Scope expects the direction of fiscal policy to remain broadly unchanged, with headline deficits of around 7%-8% of GDP
• Fiscal policy execution risks will rise, however, as negotiations over appropriations and the debt limit become more protracted
• As public debt rises and interest costs absorb a growing share of federal revenue, pressures on debt sustainability and fiscal governance remain key considerations for the US sovereign rating
• Scope expects US debt to rise from 124% of GDP in 2025 to around 145% by 2031, the second highest among advanced economies after Japan
(Editing by Aidan Lewis)
