Moodys has said that the change reflects the following factors:

• Higher systemic risk as expressed in a potentially weaker sovereign rating.
• Higher spending pressures for local authorities within a lower growth environment, in line with the UK sovereign, particularly for social care and housing, combined with the risk of weaker business rate growth and lower returns on commercial projects.
• Weaker sovereign institutional strength leading to the potential for further policy and legislative delays on key issues for the sector including business rates devolution and reform of the adult social care system.

In October 2016, Aberdeen City Council announced that it had become the first local authority in Scotland to be assigned such a credit rating.

It was initially assigned an Aa2 rating which was one level below the rest of the UK as a whole.

At the time, the local authority welcomed the rating as it would enable it to consider “innovative” new funding mechanisms, including access to debt capital markets.

Aberdeen City Council is one of five other local authorities in the UK to have received such a change in rating alongside Cornwall Council, Guildford Borough Council, Lancashire County Council and Warrington Borough Council.