For the last two years at least – not just in the run-up to the General Election – one way that those on the right kept putting the frighteners on the electorate was to raise the spectre of the UK losing its cherished AAA credit rating. Parallels were drawn with Greece and Ireland.
But it was never going to happen, and today beings news that the AAA status has been confirmed by Moody’s. On the face of it, this seems to be down to the Government’s supposed austerity programme. But the Comprehensive Spending Review which will determine the manner of that austerity is a month away.
So how does Moody’s know that the austerity programme, as they assert, will not affect the economy, which they describe as “flexible and robust”, while undergoing “austere fiscal consolidation”? Put directly, they don’t, which suggests that the way in which a given country’s credit rating is deduced is less than totally rigorous.
In any case, we are told that the UK has retained an AAA rating from Moody’s since that agency first assessed the country’s long term debt back in 1978. That, during the last days of Jim Callaghan’s Administration, was at the time when the UK was held to be the “sick man of Europe”.
So the AAA rating might not be such a big deal after all. And Moody’s would have to mark down the USA before the UK, which isn’t going to happen any time soon.
Monday, 20 September 2010
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