European ratings agency Scope downgraded U.S. sovereign credit to AA- from AA on Friday, citing “sustained deterioration in public finances and a weakening of governance standards.” The outlook was revised to stable from negative.
Scope said U.S. policymaking has become less predictable amid “the erosion of well-established checks and balances,” pointing to tariff actions affecting key trading partners and what it described as a growing consolidation of power in the executive branch. The agency said the administration has at times defied court orders, challenged judicial authority, circumvented congressional oversight and marginalized independent agencies.
The agency also highlighted the frequent use of executive orders as an example of governance concerns and said polarization and an “increasingly ineffective Congress” are complicating compromises and “urgently needed reforms” in tax, health and pension systems. It cited the ongoing budget standoff, which it noted ranks among the longest in U.S. history.
On the fiscal front, Scope warned that rising interest costs are consuming a larger share of federal revenue and projected the debt ratio could reach 140% of gross domestic product by 2030 without corrective measures. It also referenced the administration’s “One Big Beautiful Bill Act,” passed in the summer, as adding to spending in certain areas.
Scope said the rating remains supported by the size, wealth and competitiveness of the U.S. economy, continued demand for U.S. Treasury securities, the dollar’s global reserve status and the credibility of the Federal Reserve. Still, it cautioned that political pressure on the Fed to cut rates raises the risk of missing the central bank’s 2% inflation target in coming years.
Scope, based in Berlin, became the first European agency accepted by the European Central Bank as an eligible credit rating provider in 2023. The best-known global agencies include S&P Global, Moody’s and Fitch.
