US credit rating downgraded due to increasing deficits and 'erosion of governance' 

Major credit rating firm Fitch said tax cuts and new spending initiatives coupled with multiple economic shocks have swelled budget deficits

US Treasury Secretary Janet Yellen criticised the downgrade calling it 'arbitrary' and 'outdated'. Picture: AP/Shuji Kajiyama

Fitch Ratings has stripped the US of its top-tier sovereign credit grade, with the company criticising the country’s ballooning fiscal deficits and an “erosion of governance” that has led to repeated debt limit clashes over the past two decades.

This means the US’s credit rating has dropped from AAA to AA+, echoing a move made more than a decade ago by S&P Global Ratings.