Ratings agency warns Britain to lose its AAA credit rating

Ratings agency Standard & Poor's today downgraded its outlook for the British economy, saying it had grown increasingly worried about the country's ballooning budget deficit. It also warned there was a "one-in-three chance" that Britain's credit rating may be cut.

The surprise news pushed shares in London down sharply and caused gilt yields to soar on renewed fears about the recession-hit UK economy.

S&P's move caught most City experts on the hop. "This is exactly what the UK really did not need," said Manus Cranny, senior market commentator of MF Global Spreads. "The Treasury will now be hamstrung as its delicate attempts to flood the market with gilts to fund the deficit could literally be in tatters if S&P is followed by other agencies."

Colin Ellis, European economist at Daiwa Securities SMBC, said that with the "cherished" triple-A rating now under threat, the S&P move puts the spotlight on public finances.

Bad, really bad.

Its the worse report since Standard & Poor's started rating the UK in 1978!

Standard & Poors has only been putting together ratings since 1978, but ever since then the UK has had the highest possible rating: triple-A. Even in the dark days of the inflationary late 1970s and the misery of the 1980s, even through the nasty 1990s recession, the ratings agency was never worried enough about the prospect of the UK keeping up its debt payments to put a negative outlook on the rating. Today it happened.
Oh come on AJ! How can we question Daring's outlook??

These S&P people? Bankers - right? Discredited industry - right? There you go! Don't believe a word of it!

What should we believe? A non practising lawyer pretending to be a economist or some bunch of doom mongering money grabbing geeks that OBVIOUSLY have got it wrong?

No brainer........
Talk about a government having put nothing aside in the cupboard for a rainy day!

Broon, as 'The Iron Chancellor', managed single-handedly to make an utter James Hunt of the UK economy; pandered to the banking fraternity at every turn, deregulating the markets with the alacrity of a wanking circus chimp on an amphetamine-only diet; removed the single financial fiduciary authority responsible for overseeing all regulation and practise in the markets and replaced it with four (so when the smelly stuff hit the fan, they all just threw their arms in the air and instead of accepting any individual responsibility, they simply went into a finger-pointing frenzy and blamed each other).

And on top of this, where this country once used to enjoy something called 'Happy Hour', he's now replaced it with Dour Hour.

I wouldn't lend the guy 10 pence to call an ambulance if he was on fire in front of me, so it comes as no surprise that the those who set the credit rating of individual nations think he's a complete WOFT too.

In Broon's case, the revolution's gonna be televised - and called by its usual name of a General Election.

Roll on the revolution!
Are we really surprised? Giving printing money a nice uncomprehensible name is still printing money. Along with the benefits system (from which, I believe, many of our problems stem) and the amount of people who work in the public sector administering government E would be a more likely grade. Well done Iron Chancellor. And I don't mean Bismark.
What they said was this:

"The rating could be lowered if we conclude that, following the election, the next Government's fiscal consolidation plans are unlikely to put the UK debt burden on a secure downward trajectory," said David Beers, primary credit analyst for Standard & Poor's. "

So Messrs Brown and Darling have nowhere to hide and bleating about how "Tory cuts" will reduce public services ring even more hollow than they do already.

No matter who wins the next election, deep cuts are inevitable. Following over a decade of insane Labour fiscal policies, it is payback time.
STILTS said:
Where's Ashie to put the Liabore spin on this!!!!

Sorry Stilts, Ashie's been called to No10 to help Dear Leader explain TCH's expenses claims. I've kindly agreed to step in:

Thatcher's fault.

Tory toffs.

Fact-free post.

You right-wing facist BNP swine.

There, that should sort it.
I saw this on the Skynews website and thought oh bugger! I particularly liked S & Ps line of "Government debt approaching 100% of GDP would be incompatible with a AAA rating". Subtle
Has anyone seen the treasurys response?
The Treasury said:
Standard and Poor have reaffirmed the UK's triple A rating on the basis of our "wealthy, diversified economy; high degree of fiscal and monetary flexibility" and "relatively flexible product and labour markets."
Deluded or what?
rockpile said:
Are we really surprised? Giving printing money a nice uncomprehensible name is still printing money.
I've heard that one third of the newly photocopied fifties go straight on paying existing government debt while Gordon merrily racks up more debt as fast as he can sell the gilts. If they stop doing this, they're going to have a choice between sovereign default - being unable to repay loans as they fall due or not paying the salaries of government employees.

Who do you think will be high on their list of candidates for bouncing pay cheques? Here's a clue: It'll be government employees who can't strike. Can you think of any?

rockpile said:
Along with the benefits system (from which, I believe, many of our problems stem) and the amount of people who work in the public sector administering government E would be a more likely grade.
The benefits system is the single biggest cause of the mess we're in. Gordon has used tax and benefits to try to implement his vision of a socialist utopia through wealth redistribution. Or 'lifting people out of poverty' as he puts it.

We now spend £200bn per year on welfare. That's more than on the NHS and education combined. Bear that in mind next time a Labour politician starts shouting about 'schools and hospitals'. One in three of the population lives in a household where most or all of the household income comes from welfare benefits.

Thanks to the use of the civil service as a job creation scheme in areas of high unemployment, 1 in 4 of the working population now works for the government. All those ceremonial sword bearers and 5-a-day fruit'n'veg managers don't come cheap though.

Earlier this year, we reached the point where most adults in the UK are dependant on the government for their income, either through salary or benefits. The majority of the population is financially dependant of the tax paid by a shrinking minority.

Iron chancellor my arrse!
It isn't merely that the Government is set to borrow so much over the next few years – so, after all, is every other country – it is that much of what that borrowing is intended to fund could conceivably be cut. Most of the extra spending is not caused by the so-called automatic stabilisers which kick in when recession bites, but is down to Labour's stubborn commitment to continued annual increases in budgets for health, education and its other priorities.
They are going to take us all into the black hole with them....
We had a discussion a few weeks ago about the fact that the next election would be fought on how the parties are going to sort out the state of the nations finances because international confidence underpins government issued gilts which more or less pay for all the debt. Specifically we looked at how this would impact the MoD

Expect big big cuts and expect the MoD to take its share.

Tough times ahead
Dull boring Will here.
I say as I have for years that Labour in any of it's forms, Old or Nue are out to change UK's make up and social background.
Fight like Schwartzers to keep Johnny G out of UK but any form of illegal will do nicely.
I doubt the capability of any Board member to say in Words, what UK's debt is if he sees the figures written down.
Few people can comprehend beyond the six zero's of a million and as for a Billion (UK or USA) let alone the Trillion ?
Spend and tax is and always has been Labours way, it's not changed in my life and has led to every Labour administration eventually being thrown out when it finally dawns on Joe Public.
Back again. Took me a while to find some figures.

UK government downgrade and the weaker dollar

Published by John Redwood under Blog

"In recent days quantitative easing in the USA has got to the US dollar. It has started to fall against other currencies. I guess the US authorities are relaxed about that. It will correct the balance of payments more quickly, and put more pressure on the exporting countries.

Over the last year the US economy has fallen much less than the European economies, less than the UK and much less than Japan. The US still has strengths from its huge continental market, and from the energy and productivity of its workforce and from the entreprenuerial nature of many of its people. The successful exporters, led by Japan and Germany have hit worse turbulence, as they were very dependent on western demand for their range of products.

Even China has struggled. The impact of the collapse in demand must have been quite severe in the first quarter of 2009. The world can only make economic progress when the big exporters spend more of their savings, and borrow more to finance more consumption. That is happening very slowly, if at all.

In the meantime, it is quantitative easing which is providing the only drink at the wake. Today Sterling, the other QE currency, fell back from its recent rises. A ratings agency has said “We have revised the outlook on the UK to negative due to our view that, even assuming fiscal tightening the net general governemnt debt burden could approach 100% of GDP and remain near that level in the medium term”.

If only that were the limit of it. As readers of this website know, the true indebtedness and liabilities of the UK state are well above £1,500,000,000,000 already. It now costs £80,000 a year to insure £10 million of UK government bonds against default !"

thats er 1,500,000,000,000 a trillion & half ?

This really is seriously bad news for HMG (and therefore the rest of us). Possibly the best indicator yet, that under Gordon Brown's time at Numbers 11 and 10 Downing Street, that his fiscal policies have left this country near to defaulting. He really doesn't get it, does he?!
ABrighter2006 said:
This really is seriously bad news for HMG (and therefore the rest of us). Possibly the best indicator yet, that under Gordon Brown's time at Numbers 11 and 10 Downing Street, that his fiscal policies have left this country near to defaulting. He really doesn't get it, does he?!
Oh I bet he does he just does not care, he views the World in terms of Labour party tribalism, Scottish labour party tribalism at that. Its all tactical games, he thinks that the average voter has the attention span of an Alzheimer's patient. He knows that he has burned the UK down to the water line, but it does not matter because the 'Golden Age' of public services happened under his watch, all that follows is just 'Tory cuts and Tory lies'. He and his will smugly claim that the UK 'never had it so good'.

Like a parasite abandoning a dying host Labour will go into hibernation again waiting until the UK has been rebuilt enough to offer these vermin another feast.

However the usual Labour party game plan may well not work this time as the parasite may die before the host, so bad is the damage.

Latest Threads

New Posts