S&P Global Ratings has revised its outlook for the Greater London Authority (GLA) from “negative” to “stable” following an improvement in the body’s financial indicators supported by strong tax revenues.
The ratings agency said that it expected the GLA to “continue to post strong performance metrics” and that its “robust liquidity position and exceptional access to capital markets” would allow it to respond effectively to unexpected events.
The overall rating for the regional governance body that comprises the mayoralty and London Assembly remains at AA for long-term issues and A-1+ for short-term issues.
Significant debt had been incurred by the GLA as a result of its funding of London’s Crossrail project. But S&P pointed out that the GLA’s Crossrail investment in the financial year ending in March 2023 will be the final one, which should ease pressure on capital costs and reduce volatility in budgetary performance.
According to S&P Global’s Research Update: “The stable outlook reflects our view that the GLA’s financial stance will remain resilient despite pressures stemming from the weaker macroeconomic outlook and risks associated with high inflation and interest rates.”
S&P suggested that the GLA would be “resilient to economic challenges” as it is less exposed to economic risks compared with individual London boroughs.
“External risks from high inflation and increased energy prices have a limited effect on GLA’s performance, as it acts as a pass-through vehicle to its functional bodies.”
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