UK loses AAA credit rating

[Ardemax]

Not so smart now are you, George.


Moody's downgrades UK's government bond rating to Aa1 from Aaa; outlook is now stable

London, 22 February 2013 -- Moody's Investors Service has today downgraded the domestic- and foreign-currency government bond ratings of the United Kingdom by one notch to Aa1 from Aaa. The outlook on the ratings is now stable.
The key interrelated drivers of today's action are:
1. The continuing weakness in the UK's medium-term growth outlook, with a period of sluggish growth which Moody's now expects will extend into the second half of the decade;
2. The challenges that subdued medium-term growth prospects pose to the government's fiscal consolidation programme, which will now extend well into the next parliament;
3. And, as a consequence of the UK's high and rising debt burden, a deterioration in the shock-absorption capacity of the government's balance sheet, which is unlikely to reverse before 2016.
At the same time, Moody's explains that the UK's creditworthiness remains extremely high, rated at Aa1, because of the country's significant credit strengths. These include (i) a highly competitive, well-diversified economy; (ii) a strong track record of fiscal consolidation and a robust institutional structure; and (iii) a favourable debt structure, with supportive domestic demand for government debt, the longest average maturity structure (15 years) among all highly rated sovereigns globally and the resulting reduced interest rate risk on UK debt.
The stable outlook on the UK's Aa1 sovereign rating reflects Moody's expectation that a combination of political will and medium-term fundamental underlying economic strengths will, in time, allow the government to implement its fiscal consolidation plan and reverse theUK's debt trajectory. Moreover, although the UK's economy has considerable risk exposure through trade and financial linkages to a potential escalation in the euro area sovereign debt crisis, its contagion risk is mitigated by the flexibility afforded by the UK's independent monetary policy framework and sterling's global reserve currency status.
In a related rating action, Moody's has today also downgraded the ratings of the Bank of England to Aa1 from Aaa. The issuer's P-1 rating is unaffected by this rating action. The rating outlook for this entity is now also stable.

More: http://www.businessinsider.com/moodys-strips-the-uk-of-its-aaa-rating-2013-2 (http://www.businessinsider.com/moodys-strips-the-uk-of-its-aaa-rating-2013-2)

It doesn't mean that much but it does mean that Osbourne can't brag about keeping the AAA credit rating.

Thoughts?

[Chippiewill]

The credit rating was never an indicator of how well our economy is doing, it was just an indicator of how much of an idiot George Osborne is for boasting about it.

[-:Undertaker:-]

It's only going to get worse and worse.

[HOSKO02]

Credit ratings are a perfect example of the sheer power of the service sectors involved in finance. When we're not drooling over the ebb and flow of the NASDAQ or FTSE in the mornings on BBC with our morning coffee (like most of the audience understand what the hell these represent anyway), we're frantically defending facades that give perceived worth by non-accountable credit rating agencies. Modern economics is bad enough in its scaling of a countries strength, GDP/RPI/Income per Capita etc. ..and now on top of it all is a scowling three lettered status symbol of jack all.
Truth is we deserve a much poorer rating, any investment and FDI outside of the city operates in a much more desperate environment, the fact that any government would legitimise their economic policy through these multinational devices is a joke, all the while our death rates for obesity rise, child poverty is increasing, illiteracy is a threat in areas, who's parading those figures? No bugger.

[-:Undertaker:-]

Credit ratings are a perfect example of the sheer power of the service sectors involved in finance. When we're not drooling over the ebb and flow of the NASDAQ or FTSE in the mornings on BBC with our morning coffee (like most of the audience understand what the hell these represent anyway), we're frantically defending facades that give perceived worth by non-accountable credit rating agencies. Modern economics is bad enough in its scaling of a countries strength, GDP/RPI/Income per Capita etc. ..and now on top of it all is a scowling three lettered status symbol of jack all.

But they are accountable. The whole purpose of credit rating agencies is to act as an indicator for other countries and investors around the world as to whether a country is worth investing in, either directly or indirectly. I am always reminded when people blame the credit ratings agencies of how the EU reacts when one of it's economies are downgraded - fury follows along with chants of "its an Anglo-American conspiracy to bring the 'project' down". The truth is, a credit rating agency merely indicates the chances of you having your money returned to you. In the case of the bloated, welfare dependent western economies; every moment that passes it's becoming more and more unlikely that these debts will ever be repaid.

Don't shoot the messenger as they say. I personally think the credit rating agencies are being far too soft in their ratings.


Truth is we deserve a much poorer rating, any investment and FDI outside of the city operates in a much more desperate environment, the fact that any government would legitimise their economic policy through these multinational devices is a joke, all the while our death rates for obesity rise, child poverty is increasing, illiteracy is a threat in areas, who's parading those figures? No bugger.

I'd agree that we don't deserve this rating, indeed I think we are in the C range - as our ability to repay those debts back is becoming slimmer and slimmer everyday that passes as the government is still increasing spending and not reducing it.

The point is being reached where we won't be able to pay the debts back unless we have drastic drastic cuts now.