Britain's Credit Rating Downgraded

Britain's Credit Rating Downgraded


9:58pm UK, Friday
22 February 2013

Moody's has downgraded Britain from its AAA
rating

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  Rating agency Moody's has cut Britain's debt rating from the
  top-grade AAA to AA1, citing slow growth and a rising debt burden.
  
  Moody's said the main reason for the downgrade was "increasing clarity that,
  despite considerable structural economic strengths, the UK's economic growth
  will remain sluggish over the next few years."
  
  The downgrade by one notch could make it more difficult for Britain to borrow
  on international markets.
  
  Sky Economics Editor Ed Conway said: "The fact that Britain has lost its AAA
  crown for the first time since credit ratings were given to the UK back in the
  1970s, it's a really big blow to Britain's reputation.
  
  "It's something of an economic blow, but in a way it's more of a political
  problem for the Chancellor George Osborne.
  
  "He made a key part of the conservative election pledge to safeguard
  Britain's credit rating. He talked explicitly about safeguarding Britain's AAA
  credit rating."
  
  "Tonight we have a stark reminder of the debt problems facing our country -
  and the clearest possible warning to anyone who thinks we can run away from
  dealing with those problems.
  
  Following Moody's announcement, the Chancellor said: "Far from weakening our
  resolve to deliver our economic recovery plan, this decision redoubles it.
  
  "We will go on delivering the plan that has cut the deficit by a quarter, and
  given us record low interest rates and record numbers of jobs.
  
  "As the rating agency says, Britain faces huge challenges at home from the
  debts built up over many many years, and it is made no easier by the very weak
  economic situation in Europe.
  
  "We are not going to run away from our problems, we are going to overcome
  them."
  +++++++++++
  Let's hope the new BOE Boss soon to replace Bernard comes up with better ideas than quantitive easing, the FSA does it's job and monitors the Banks with eagle eyes, and George comes out with some clever ideas to boost the Economy.
  Gordon Brown has a lot to answer for.....".no more boom and bust" has a hollow ring .
  

Osborne Needs To Show He Has Got A Grip


After the UK lost its prized AAA credit rating, the
pressure is on in the countdown to the March 20 budget.


12:00pm UK,
Saturday 23 February 2013

The credit rating downgrade is a major setback for the
Chancellor

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Adam Boulton

Political Editor

More from Adam | Follow Adam on
Twitter


The political consequences of Moody's downgrading Britain's
credit rating are more certain than its economic ones.

This is a major blow to George Osborne's economic credibility because he has
failed by his own standards.

In the 2010 Conservative manifesto (written by Mr Osborne), the Tories
promised 'we will safeguard Britain's credit rating with a credible plan to
eliminate a large part of the structural deficit over a Parliament' but this
Chancellor has failed on both counts.

The deficit is climbing again and Mr Osborne has conceded things won't get
much better until well past the next general election.

Even his Labour opposite number Ed Balls accepts that the record of ratings
agencies has been poor.

They failed for example to spot the banking crunch in 2008. But Mr Balls can
now say with increasing confidence that external judges have lost their
confidence in Mr Osborne's medicine.

Indeed on Sky News, Mr Balls compared the Chancellor to a quack doctor
bleeding his patient to death.

However in his dramatic response to the bad news late last night, Mr Osborne
is insisting that he will not be blown off course.

Indeed he argues that a lower credit rating means austerity is all the more
necessary.

The question for him is how long this analysis goes on being shared by his
own party and the majority of the country at large.

Opinion polls show that the public still narrowly considers the coalition
more economically competent than Labour but as time wears on at some point the
Government will be held accountable for the current state of the economy rather
than blaming the economic inheritance from Blair/Brown years.

There is considerable truth in Mr Osborne's claim that global circumstances
are much worse than he hoped at the time of the general election.

Latest predictions for growth in Europe this year are miserable even for
Germany but this downgrading shows that the Osborne strategy has not bucked the
trend.

Britain joins the likes of America and France in a lower credit tier below
Germany and Canada; the only G7 nations still AAA.

This is not the only bad news Mr Osborne has had this week.

Even before last night the pound was down 7% in currency exchanges and the
exchequer was £1bn short in its expected revenue from 4G licences.

So the pressure is on in the countdown to the March 20 budget. Last year's
budget was a shambles so Mr Osborne urgently needs to show this time that he has
got a grip. History tells us that few chancellors survive prolonged economic
hard times.

Surely Osborne isn't surprised at the downgrade? If he is he's demonstrating his complete lack of credibility, everyone else and their dog have been expecting this to happen for months.....
Perhaps if he'd asked his rent boy friends in the banking sector to release money into the economy for development rather than allowing them to continue to pay themselves obscene bonuses we'd have stood a chance.
Instead he's sanctioned a vast new introduction of taxes, both stealth and direct... while his party continues to bring hordes of immigrants from across Europe and Asia to take British jobs, benefits and homes.

Ed Balls has no room to criticise Osborne's record... he was and is a leering member of New labour... the party directed by the War Criminal Blair and the blustering oaf Brown who brought about the downfall of what was once a thriving and industrious nation....

yes malena Moodys has been touting for months that unlsee Britain's situation improved it would be downgraded. George
is adamant he is on the right path no change in his strategy. Moody's also said economy is not improving .Economists say borrowing huge sums of money is not the answer.

Panda wrote:yes malena Moodys has been touting for months that unlsee Britain's situation improved it would be downgraded. George
is adamant he is on the right path no change in his strategy. Moody's also said economy is not improving .Economists say borrowing huge sums of money is not the answer.

Losing our triple A rating is a real blow but, as you say, no surprise.

Osborn clearly has no idea what to do about anything. Time to kick him out.

That said, I don't think there's anyone who's capable of undoing the damage that Blair and Brown did to this country. They are responsible for the mess we're in. As for the thought of Ed Balls as Chancellor, please...NO!

Angelina wrote:

Panda wrote:yes malena Moodys has been touting for months that unlsee Britain's situation improved it would be downgraded. George
is adamant he is on the right path no change in his strategy. Moody's also said economy is not improving .Economists say borrowing huge sums of money is not the answer.

Losing our triple A rating is a real blow but, as you say, no surprise.

Osborn clearly has no idea what to do about anything. Time to kick him out.

That said, I don't think there's anyone who's capable of undoing the damage that Blair and Brown did to this country. They are responsible for the mess we're in. As for the thought of Ed Balls as Chancellor, please...NO!

Angelina, Tony Blair might have millions in the bank but he has no principles which accounted for 13 yrs of sleaze , a phoney War which solved nothing and resulted in the loss of so many Soldiers lives., cover ups, the destruction of the NHS and a Chancellor who bankrupted the Country and took away the prestige of the British Banking System and it's reputation.

Vince Cable Dismisses AAA Credit Downgrading To AA1 As 'Background Noise'
PA | Posted: 24/02/2013 12:33 GMT | Updated: 24/02/2013 14:16 GMT

http://www.huffingtonpost.co.uk/2013/02/24/vince-cable-aaa_n_2752909.html


Vince Cable has called the move 'largely symbolic' .100141Get UK Politics Alerts:

Vince Cable dismissed the loss of Britain's prized AAA credit rating as "background noise" today.

The Business Secretary admitted that Chancellor George Osborne had been eager to maintain the top level, but said the reduction to AA1 was "largely symbolic".

Cable also said the Lib Dems could vote with Labour on a Commons motion on a mansion tax - if the opposition refrains from "playing politics."

Explaining its ratings decision on Friday, agency Moody's pointed to "subdued" growth prospects and a "high and rising debt burden" weighing on the economy.

It now expects the "period of sluggish growth" to "extend into the second half of the decade".

Labour branded the move a "humiliating blow" for Osborne and called for higher spending to boost the economy, while there were renewed demands from the political right for tougher curbs on budgets and tax cuts.

However, the Chancellor has vowed to press ahead with his economic strategy, insisting there was no sensible alternative.

Speaking on the BBC's Andrew Marr Show this morning, Cable rejected the idea of slashing spending further.

But he hinted that investing more in infrastructure, skills and science could help boost the economy.

Asked about the impact of the rating reduction, Cable said: "It is largely symbolic.

"In terms of the real economy there is no reason why the downgrade should have any impact.

"If you remember last year the US was downgraded, the economy grew strongly relative to Europe... and France had a downgrade last year, its interest rates that it borrows long term in the markets are only a little above ours.

"These things do not necessarily affect the real economy but they reflect the fact that we are going through a very difficult time and we are trying to balance the need to get the deficit and the budget under control with the need to get back to economic growth."

Cable went on: "The rating agencies have a pretty bad record. They are a bit like tipsters. They get some things right and a lot of things not right.

"They are part of the background noise we have to take into account."

Cable said: "I think to embark on a slash and burn policy in response to this would be utterly foolish and counterproductive, and I am sure we will not be going there.

"What I am concentrating on in my job in government is factors that create real substantial long term growth.

"In other words skills training, supporting manufacturing, supporting exports, investing in science. These are the things that really matter."

Cable was asked about a call from Mark Littlewood - director general of the free market Institute of Economic Affairs and a former Lib Dem press chief - for deeper public spending cuts.

"Well, he's a right-wing ideologue," he replied.

On the question of whether the Government could afford to spend more, the Cabinet minister said: "I thought it depends what the spending is for. We have to reduce government current spending, that is what we are trying to do...

"But there is a lot of government spending that is investment in the future, investment in skills and science and infrastructure, and we have got to continue doing that."

Cable said the argument about whether the coalition should shift from 'Plan A' to 'Plan B' was "a bit juvenile".

"What we are actually talking about is Plan A+, or Plan A++. Of course you have got to have the budget discipline but you have also got to have the government acting in a way that supports growth," he added.

Labour has come out in favour of a mansion tax, one of the Lib Dem's key policies.

Asked whether the party would vote with Labour on the issue, Cable said it would depend how the motion was worded.

He added: "We don't rule it out, I think it's probably unlikely that the Labour Party would resist the temptation to play politics with this."

Labour deputy leader Harriet Harman told the BBC: "The reason why the deficit hasn't been going down is because the economy hasn't been growing and the way you get growth is a One Nation approach where you invest in people, in industry, in infrastructure to help the economy grow.

"The trouble is that if George Osborne doesn't understand what is going on and won't change course, then people face more years of 'Will our kids ever be able to get a job, will they ever be able to move out of home, are we going to see our living standards falling back?'

"I think really, how many more signs does he need before he realises that their economic plan has failed and has made things worse and they need to change course?"

Former Labour chancellor Alistair Darling said he had been "extremely doubtful" of the Government's strategy ever since 2010.

He told Sky News' Murnaghan programme: "I think that when they were elected they very unwisely staked their reputation on maintaining the AAA credit rating that they had, they compared us to Greece, they said they could eradicate the structural deficit by 2015.

"These were wildly optimistic claims and they were perhaps made because of inexperience and maybe a touch of recklessness.

"But the result is that they have sustained quite substantial political damage, but more importantly for the country the economic harm of yet another another blow to confidence. I think that is very, very important, they have been following the wrong economic strategy, but they are paying a very, very heavy price for it."

Darling said there was flatlining growth with more borrowing, adding: "There are many people who now say, look you have to change tack, you have to recognise that a plan to try and slash and burn your way out of this simply will not work."

He added the Government was pursuing policies "that simply don't work".

Asked if Osborne should consider his position, he replied: "I'm sure he'll reflect on whether it was wise to go on about the credit rating which he's been doing since 2009. It's not him it's the whole Government, the whole Government is pursing a misguided policy."

Former Conservative chancellor Kenneth Clarke defended Osborne's strategy and said the Government should "carry on with the sensible economic policies we've got".

He told Sky News' Murnaghan programme: "It is quite clear that the global economic and financial crisis is persisting, it's worse than we thought, several more years are required and I don't think for most people actually in the circumstances of 2013 this change to the credit rating comes as much of a surprise.

"The Americans have already lost their AAA rating and they like us are going to have to persist with sensible policies combining getting rid of debt and deficit, at the same time stimulating growth and having an industrial strategy.

"It's going to take several more years of this, in order to get back not just our credit rating which we will get back eventually but to get back to sensible economic growth."

He added: "The idea you press a button called growth and it works in this international climate is of course nonsense."

Asked if Osborne should consider his position, Clarke replied no-one could forecast a country's position in two or three years time and in the present circumstances "Britain was doing better than most other European countries".

He urged the Government to "stick to" its policy, adding: "I think the way in which we will recover confidence is making clear we're a strong firm Government, that the strategy we're on is the one that is eventually going to get things better and that the alternatives frankly are a bit odd."

Fellow former Conservative chancellor and Tory peer Lord Lawson said he did not think Osborne had lost "any authority at all" and was pursuing the right policies.

He told Sky News' Murnaghan programme that the economy was not teetering on any brink but bumping along the bottom.

He said: "We are gradually coming out of this recession but it's going to be a very slow, very long, very painful process I'm afraid.

I think that what is absolutely clear, is that he has to stick to the policy that he has been pursuing. There are maybe one or two other things he could do to improve it but not change the basic thrust of the policy."

Tory former chancellor Lord Lamont played down the impact of the reduction, and suggested Osborne had set too much store by the AAA rating.

"The message that this sends out is that the fiscal consolidation is in the opinion of some people taking longer than expected," he told BBC Radio 4's World This Weekend.

"But it is wrong to draw the lesson from that as being you ought to expand borrowing and moderate it even further.

"If anything they are saying, 'you are going too slowly'...

"We have always been on a plan B, in a sense, rather than a plan A but I don't think, as I say, one should draw the conclusion that we should go more slowly."

The peer said some people believed there would soon be no AAA ratings left, adding that "even Germany may be vulnerable".

Asked if Osborne had previously overstressed the importance of the credit rating, Lord Lamont said: "Maybe you shouldn't have placed so much emphasis on it then, but you shouldn't place so much emphasis on it now either."

He went on: "I would be surprised if it significantly increased the costs of borrowing by itself."

Tory backbencher Adam Afriyie - touted by some as a future party leader - said reductions in public spending had not been very deep, and called for tax cuts.

He also demanded that red tape from Brussels be slashed, and proposed efficiency measures such as introducing e-invoicing - which he claimed could save billions of pounds a year.

"The Coalition is about to enter the last chance saloon. On Friday the UK lost its AAA credit rating, with Moody's citing a lack of growth for its downgrade decision," he wrote in the Mail on Sunday.

"Without growth, the Government will not secure a Conservative majority in 2015. For all the cuts and austerity, core Government spending has been reduced by only 3% since May 2010 and the national debt will actually increase by 58% over the course of the Parliament.

"This Budget is a final opportunity to deliver real growth before 2015. Grandiose infrastructure projects have their place but they do not deliver immediate economic benefits. What we need are bold, simple, serious measures to secure growth right now."

He attacked the tax system as "horrendously complicated", insisting high rates "penalise wealth creation" and hamper job creation.

"The aim of the tax system is not merely to raise more cash for the Exchequer; nor was it created so that politicians could use it as a vehicle to demonstrate their political ethics," he said.

"Our current system acts as one long line of massive barriers to growth. These barriers can be removed only by simplifying the tax regime."

I doubt if Osborne can do anything to improve the economy for this year , the EC is in the Doldrums and is unlikely to improve it's position this year , in fact, it's getting worse.

Panda wrote:I doubt if Osborne can do anything to improve the economy for this year , the EC is in the Doldrums and is unlikely to improve it's position this year , in fact, it's getting worse.

While he persists in his ridiculous idea of allowing big business to avoid paying a fair proportion of their profits as tax and the ritual of giving vast amounts of cash to nations who are far better off than we are, we'll never get out of the downward spiral we are in.

malena stool wrote:

Panda wrote:I doubt if Osborne can do anything to improve the economy for this year , the EC is in the Doldrums and is unlikely to improve it's position this year , in fact, it's getting worse.

While he persists in his ridiculous idea of allowing big business to avoid paying a fair proportion of their profits as tax and the ritual of giving vast amounts of cash to nations who are far better off than we are, we'll never get out of the downward spiral we are in.

malena, Osborne was born with a silver spoon in his mouth so will never understand the "working" or should I say "non working class". It should be a prerequisite that any Chancellor should have a degree in Economics . He is very reluctant to tax the rich because he is afraid they will take their business elsewhere , which they would.

I think the most scary thing is the Judiciary flouting British Law in favour of European Law with regard to immigration.

Pound 'At Risk' After AAA Credit Rating Blow


The value of the pound comes under pressure on the currency
markets after Britain loses its prized credit rating.


8:22am UK, Monday
25 February 2013

There are concerns that sterling may be hit
hard

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Global financial markets are to deliver their first response to
the decision of a major credit agency to strip the UK of its prized AAA credit
rating today.

Senior Conservatives have rallied round Chancellor George Osborne in the wake
of the decision by agency Moody's, predicting it will have little impact on the
Government's borrowing costs.

But there are fears that sterling will be hit hard after it fell sharply
against the dollar overnight in Asia.

Tory backbenchers also upped calls for tax and spending cuts to kick-start
growth, warning that next month's Budget is the "last chance saloon".

Meanwhile, Labour reiterated its calls for borrowing to be increased in the
short term to fund a fiscal stimulus.

Explaining its move on Friday, Moody's pointed to "subdued" growth prospects
in the UK and a "high and rising debt burden".

It now expects the "period of sluggish growth" to "extend into the second
half of the decade".

Business Secretary Vince Cable dismissed the downgrade as "largely
symbolic".

The Liberal Democrat told the BBC's Andrew Marr Show: "In terms of the real
economy there is no reason why the downgrade should have any impact.

"If you remember last year the US was downgraded, the economy grew strongly
relative to Europe... and France had a downgrade last year, its interest rates
that it borrows long term in the markets are only a little above ours.

"These things do not necessarily affect the real economy but they reflect the
fact that we are going through a very difficult time and we are trying to
balance the need to get the deficit and the budget under control with the need
to get back to economic growth."
Lord Lawson has warned of a 'run on
sterling'
Tory former chancellor Ken Clarke warned it would take years to regain the
top credit rating and return to "sensible economic growth".

But he said the coalition should "stick to" its policy, adding: "I think the
way in which we will recover confidence is making clear we're a strong firm
Government, that the strategy we're on is the one that is eventually going to
get things better and that the alternatives frankly are a bit odd."

Former Conservative chancellor, Lord Lawson, insisted the "basic thrust" of
the Government's policy was right, but he also warned that ministers and the
Bank of England had to be careful not to trigger a run on the pound.

The peer told Sky News' Dermot Murnaghan programme: "I hope there won't be a
run on sterling.

"I think it would be a very great mistake if anyone in the Government or Bank
of England gave the impression we would like to see a further depreciation of
sterling. That would not be clever, that would not be sensible, that would not
be helpful."

Former Labour chancellor Alistair Darling said he had been "extremely
doubtful" of the Government's strategy ever since 2010.

He told the Murnaghan programme: "I think that when they were elected they
very unwisely staked their reputation on maintaining the AAA credit rating that
they had, they compared us to Greece, they said they could eradicate the
structural deficit by 2015.

"These were wildly optimistic claims and they were perhaps made because of
inexperience and maybe a touch of recklessness.

"But the result is that they have sustained quite substantial political
damage, but more importantly for the country the economic harm of yet another
another blow to confidence. I think that is very, very important, they have been
following the wrong economic strategy, but they are paying a very, very heavy
price for it."
===========================
The £ has fallen against all currencies which will help exports but bad news for Tourist rates. It is expected that if George Osborne's Budget in April does not improve the situation he will be forced to resign.

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Just one in 14 believe economy will pick up


Just one in 14 Britons believes the country’s economy will be in better
shape in six months’ time, making them more pessimistic than Spain and Italy.










Photo:
AFP



By Rosa Silverman

7:38AM GMT 28 Feb 2013


17 Comments




A global Ipsos MORI poll published a week after the UK lost its AAA credit
rating found UK public confidence ranked 23rd out of 24 countries.


The only country in the survey to record a lower score than Britain’s seven
per cent was France, where only three per cent of citizens were optimistic about
their country’s economic prospects.


The British public were found to be slightly more positive about the current
state of the country’s economy than some other western populations were about
theirs, however.


Some 13% of Britons described the UK economy as “good”, which is unchanged
since December.


Britain is ranked 19th out of 24 on this measure, ahead of Japan (9%),
Hungary (8%), France (5%), Italy (5%) and Spain (3%).



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  25 Feb 2013
  
• 
  Blow for Osborne as Britain loses triple A credit
  rating in downgrade
  22 Feb 2013
  

In AAA-rated Sweden, 73% said their economy was in “good” shape, and in
Germany, which also has an AAA score, the figure was 65%.

But bullishness appeared to be declining in the US, where only 29% of
Americans described their economy as “good”, down two points on December’s
figure.

Simon Atkinson, deputy chief executive at Ipsos MORI, said: "The loss of the
AAA rating has of course been a shock to the politicians. But it is unlikely to
change the mood among the public - they downgraded their assessment of the
economy some years ago.

“These figures, like some of our economic data, have flatlined. The public
need inspiration from somewhere but, at the moment they aren't seeing green
shoots anywhere."

Moody’s, the credit ratings agency, downgraded the UK’s rating this month.


Kenneth Clarke, the former chancellor and now minister without portfolio, has
admitted it could take the country years to get it back.

At the global rather than the local level, economic confidence assessments
have continued to improve, with 37% of people across all the countries surveyed
in the poll believing their current national economic situation is “good.”