It is safer to lend money to Birmingham City Council than the United States government, according to a leading firm of financial analysts.
Moody’s Credit Rating Agency believes the chances of the council failing to repay a loan are almost nil.
The agency has awarded the city a triple A credit rating, the highest possible mark indicating rock-solid finances.
While Moody’s still rates the US government triple A, it lowered its outlook on American debt to “negative” – indicating the likelihood of a downgrade.
Earlier this year, the United States credit rating was cut for the first time in its history from triple A to AA+ by another ratings agency, Standard and Poor’s, causing world stock markets to slump.
Not only does the Moody’s rating place the council above the USA in terms of credit worthiness, it also puts Birmingham ahead of many major banks.
Several European countries, including Greece and Italy, have also seen their credit ratings cut along with financial institutions Lloyds, Santander, RBS, the Co-operative Bank and the Nationwide.
City council leader Mike Whitby claimed many organisations would be envious of Birmingham’s high standing.
The triple A rating will allow the council to negotiate lower interest rates when borrowing money in future, he said.
Coun Whitby (Con Harborne) added: “The challenge facing the public sector is to be as innovative as possible when it comes to financing priorities.
“We have expended a tremendous amount of effort into injecting financial discipline and ensuring our finances are stable, because we take our role as the custodian of the public purse seriously.”
“There will be many large organisations that will be envious of the recognition we have received, who will perhaps themselves be unable to achieve a triple A rating.
Birmingham City Council is one of just a small number of public sector bodies to have official credit ratings, including Kensington & Chelsea Council, Cornwall County Council and Transport for London.
Adam Hudson, of HSBC bank, appointed to advise the council during the credit rating process, said: “HSBC is pleased to have worked with Birmingham in achieving these very strong credit ratings, which we believe are both reflective of the importance of the region within the UK and the strength and depth of the council’s management team.”