In a special report looking at English local government, the firm said the robust prudential regulatory regime, a stable inter-governmental relationship and transparency around financial forecasts provided sound protection for creditors.
The review highlighted that devolution to English local government had increased, and that plans to fully devolve business rates to the sector from 2020 could also boost growth and prosperity.
“Local authorities have a statutory duty to maintain a level of unallocated reserves that are sufficient to manage financial risks,” the report stated.
“This framework aims to reduce spending in step with any decline in income, thereby making it difficult for local authorities to fail financially.”
However, the analysis also stated the UK was one of the countries in western Europe where the analysis of the complete financial information from the public accounts is most complicated.
“Therefore, it is difficult to compare the budgetary performance of local and regional governments, as well as their fiscal flexibility across countries,” it concluded.
