US government shutdown negative for credit rating, Europe's Scope warns

Core Viewpoint - The shutdown of the U.S. government poses additional risks to the country's credit rating, which is already under threat of downgrade according to European rating agency Scope [1][2]. Group 1: Credit Rating Implications - Scope currently rates the U.S. at 'AA' with a 'negative outlook', indicating concerns over political polarization and its impact on creditworthiness [1]. - The unconventional policy approach of the current administration is seen as detrimental to the U.S. governance system's checks and balances, which negatively affects the sovereign rating [2]. Group 2: Political Risks - The risk of a U.S. default due to political disputes is increasing, although still considered unlikely; such an event would have significant repercussions [2]. - As political divisions deepen, the likelihood of reaching key policy compromises by debt limit deadlines diminishes [3]. Group 3: Fiscal Outlook - Despite a $5 trillion increase in the debt ceiling, further increases will likely be necessary by 2028 due to a weak fiscal outlook [4]. - Scope projects that the U.S. budget deficit will remain around 6%, with the debt-to-GDP ratio expected to rise to 127% over the next five years [4].