One of the world’s biggest rating agency has downgraded the outlook of the credit ratings for state governments from “stable” to “negative”.

Moody’s argues that the focus on delivering a 2020 budget surplus will put more pressure on the states amid a slowing economy where consumer confidence is low.

Senior credit officer John Manning tells Ross Greenwood this is something states are going to have to face.

“When you add the subdued household consumption state revenues are really being squeezed.

“And at the same time private investment in the economy is quite muted and this has really resulted in the states having to implement a lot of spending initiatives.”

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