Fitch Downgrades United Kingdom To ‘aa+’; Outlook Stable

U.S. Relations With United Kingdom

This report provides a complete overview of all commercial beverage consumption trends, latest market developments and an economic mood indicator Full Report Details at – www.fastmr.com/prod/685562_united_kingdom_quarte .. What is the current market landscape and what is changing? Economic statistics published during June cast new light on the scale of the 2008-09 economic downturn, which was deeper than previously estimated, with the subsequent recovery also slightly weaker. What are the key drivers behind recent market changes? Average weekly earnings growth rose to 1.3% in the three months to April, mainly due to higher bonus payments. The labor market otherwise appears to have been relatively stable during 2013. What makes this report unique and essential to read? Designed for clients who want to understand the latest trends in the United Kingdom beverage industry and want more detail and analysis on this data. Canadean’s United Kingdom Quarterly Beverage Tracker report is ideal for benchmarking total market vs retail audit data and is an essential tool for keeping up-to-date with the latest industry and market developments Key Features and Benefits Readers are provided with a summary snap shot table showing category growth in Q22013vsQ22012, together with 2012 actual volumes, 2013 forecast volumes and projected growth An economic mood indicator, completed by Canadean’s local consultant, examines (on a scale of one to five) whether confidence levels in the industry are better or worse than the previous quarter, whether net prices are rising or falling and how Private Label products have performed versus the rest of the market. Selected retail pricing data is given for the most recent quarter and the previous four quarters, enabling analysis of price movements. Key highlights of the last quarter’s commercial beverage performance are identified and the key market drivers examined Volumes for Q2 2013vs Q22012, full year 2012, moving annual totals (MAT) and 2013 forecasts are provided for each individual beverage category, together with supporting text on quarterly performance and forecast assumptions. More granular data is provided for the Carbonates category, with data split by regular vs low calorie, and by key flavours.

U.S.-UNITED KINGDOM RELATIONS The first, short-lived British colony in Virginia was organized in 1584, and permanent English settlement began in 1607. The United States declared its independence from Great Britain in 1776. The American Revolutionary War ended in 1783, with Great Britain recognizing U.S. independence. The two countries established diplomatic relations in 1785. The United States broke relations when it declared war on the United Kingdom during the War of 1812; relations were reestablished in 1815. The United States has no closer ally than the United Kingdom, and British foreign policy emphasizes close coordination with the United States. Bilateral cooperation reflects the common language, ideals, and democratic practices of the two nations. Relations were strengthened by the United Kingdom’s alliance with the United States during both World Wars, in the Korean conflict, in the Persian Gulf War, in Operation Iraqi Freedom, and in Afghanistan, as well as through its role as a founding member of the North Atlantic Treaty Organization (NATO). The United Kingdom and the United States continually consult on foreign policy issues and global problems and share major foreign and security policy objectives. Regarding Northern Ireland, which is part of the United Kingdom, “Nationalist” and “Republican” groups seek a united Ireland that includes Northern Ireland, while “Unionists” and “Loyalists” want Northern Ireland to remain part of the United Kingdom. U.S.

The UK economy is not expected to reach its 2007 level of real GDP until 2014, underscoring the weakness of the economic recovery. – Despite significant progress in reducing public sector net borrowing (PSNB from a peak of 11.2% of GDP (GBP159bn) in 2009-10, the budget deficit remains 7.4% of GDP (excluding the effect of the transfer of Royal Mail pensions) and is not expected to fall below 6% of GDP and GBP100bn until the end of the current parliament term. The slower pace of deficit reduction means that the next government will be required to implement substantial spending reductions (and/or tax increases) if public debt is to be stabilised and reduced over the medium term. The Stable Outlook on the UK’s sovereign ratings reflects the following factors. – Under Fitch’s baseline economic and fiscal scenario, which assumes a continued policy commitment to reducing the underlying budget deficit and medium-term annual growth potential of 2%-2.25%, government debt gradually falls as a share of national income in the latter half of the decade. – The long average maturity of public debt (15 years) – the longest of any high-grade sovereign -exclusively denominated in local currency and low interest service burden implies a higher level of debt tolerance than many high-grade peers. – The international reserve currency status of sterling and the ability and willingness of the Bank of England to intervene in the UK government debt market largely eliminates the risk of a self-fulfilling fiscal financing crisis. – The gradual improvement in the UK banking sector’s capital and liquidity position has further reduced contingent liabilities arising from this sector. The UK’s ‘AA+’ rating is underpinned by its high-income, diversified and flexible economy as well as a high degree of political and social stability. The monetary policy framework as well as sterling’s international reserve currency status afford the UK a high degree of financial and economic policy flexibility. Strong civil and policy institutions and a high degree of transparency enhance the predictability of the business and economic policy environment that compares favourably with peers in the ‘AA’ category. Weak economic performance and growth prospects, relatively high levels of private and foreign as well as public debt, along with sizeable twin fiscal and current account deficits, are weaknesses relative to rating peers. RATING SENSITIVITIES The Stable Outlook indicates a less than 50% chance of a change in the UK sovereign ratings over the next two years. The main factors that could lead to a negative rating action, individually or collectively, are: – Failure to stabilise the government debt to GDP ratio over the medium term.