Standard & Poor’s has revised Australia’s AAA long-term credit rating outlook to negative, due to growing fiscal vulnerabilities.

The agency has lowered its outlook from stable to negative, and said there is a one-in-three chance the rating could be lowered within two years if measures to improve the budget position are not passed by parliament.

“The negative outlook on Australia reflects our view that prospects for improvements in budgetary performance have weakened following the recent election outcome,” S&P said in a statement.

This follows Standard & Poor’s warning on Monday that it could lower the AAA rating if parliamentary gridlock on the budget continued as a result of political uncertainty following the federal election.

“Irrespective of the political composition of any new government, we could lower the rating if parliamentary gridlock on the budget continues and Australia’s budgetary performance does not improve broadly as we expected a year ago,” the ratings agency said on Monday.



