UK loses AAA Credit Rating

Discussion in 'Politics, Religion, Social Issues' started by Dr McKay, Feb 23, 2013.

  1. Dr McKay macrumors 68040

    Dr McKay

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    Kirkland
    #1
    The UK has lost its top AAA credit rating for the first time since 1978 on expectations that growth will "remain sluggish over the next few years".

    The ratings agency Moody's became the first to cut the UK from its highest rating, to Aa1.

    Moody's said the government's debt reduction programme faced significant "challenges" ahead.

    Chancellor George Osborne said the decision was "a stark reminder of the debt problems facing our country".

    "Far from weakening our resolve to deliver our economic recovery plan, this decision redoubles it," he added. "We will go on delivering the plan that has cut the deficit by a quarter."

    But the BBC's political editor Nick Robinson said Mr Osborne now risks being dubbed the "downgrade chancellor".

    "Worse could follow if the Budget shows borrowing rising... but for most people, what will matter is not credit ratings or statistics but higher fuel, food and other prices and if interest rates go up," he added.

    The UK has had a top AAA credit rating since 1978 from both Moody's and S&P.

    Shadow chancellor Ed Balls said the decision was a "humiliating blow to a prime minister and chancellor who said keeping our AAA rating was the test of their economic and political credibility".

    Source
     
  2. 7thson macrumors 6502a

    7thson

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    #2
    Moody's and S&P got a lot of flack for giving all those mortgage backed securities AAA ratings, which most certainly caused the greater part of the economic doldrums the international markets are experiencing right now. They did the same to America a few years back, lowered the credit rating that is, but people still want to do business with us. I think Moody's credibility is being scrutinized and this is how they are trying to show that they are capable of objectively analyzing global finances. I'm sure this doesn't make it any less of a slap for the UK government, but ultimately it's going to be business as usual. Wipe the mud off their faces and get back to it.
     
  3. VulchR macrumors 68020

    VulchR

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    #3
    Great. So now my £'s will be worth less, and the UK Lib-Tory government is even more determined to follow this suicidal path of mean-spirited reductions in spending so the wealthy can get yet more wealthier.

    There is no austerity fairy....
     
  4. eric/ Guest

    eric/

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    Location:
    Ohio, United States
    #4
    Was going to post this but forgot.

    Yeah that one was coming a mile away. The UK is in a world of hurt and problems right now.
     
  5. zin macrumors 6502

    Joined:
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    United Kingdom
    #5
    Well, that's what happens when you choke an economy with austerity, in addition to placing a history graduate in charge of a multi-trillion $/£ economy.

    And to think, the Bank of England may be considering negative interest rates. Beyond a joke.

    Nationalise the Bank of England, complete control of monetary policy should remain with an elected government and not a private corporation.
     
  6. Peace macrumors Core

    Peace

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    Space--The ONLY Frontier
  7. firestarter macrumors 603

    firestarter

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    #7
    Rich/poor divide opened up more under the last Labour government.

    And they were the ones who got us into this economic mess in the first place.

    Hope you were just as critical of them back then...
     
  8. VulchR macrumors 68020

    VulchR

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    #8
    I am curious about the source for that assertion. Judging from what I can see, income inequality started rising dramatically under Thatcher and has plateaued ever since (source for graph).

    [​IMG]

    You're right. Labour were stupid and naive to get into bed with the financial sector, with all of their BS about how it is possible to make money without creating anything. But then again, we have seen worldwide that the bankers largely lied to governments, and to each other. Their arrogance, greed, dishonesty, and criminality have caused this crisis.

    Labour was also foolish in accepting blindly that the private sector could reduce the costs of providing public services, for we are now reaping the high costs of PFI and other public-private partnerships.

    The thing is, the Lib Tories currently have the benefit of hindsight about both Labour's and their own mistakes. They have been in power for a sufficiently long time to take a cold, hard look at the numbers and come to the only rational conclusion: Having a blind faith in austerity, the private sector, and tax cuts has failed. Utterly. It is likely to continue to fail. And yet these guys stick to their dogma.

    I probably lean more the the left than to the right, but in the end I would like to think my government is run by rational pragmatists rather than demagogues.
     
  9. roadbloc macrumors G3

    roadbloc

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    Location:
    UK
    #9
    I wish I understood politics so I could actually form an accurate opinion. I would like to think our politicians know what they're doing... however there has been nothing in my life to show for this, only scandal after scandal and things slowly worsening.

    But as I said, I don't understand politics very well. For all I know, we could have the best guys on the job, but it's just going to take a good few years to sort the mess out like they say.
     
  10. Happybunny macrumors 68000

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    #10
    This is the truth, and I believe before this crisis is over, both people and countries will have lost a lot more than AAA status.:mad:
     
  11. Mr-Kerrse macrumors 6502

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    United Kingdom
    #11
    It's all part of a conspiracy apprently everyone & every country is in debt so someone somewhere is getting very rich while the poorer get poorer.

    Jump 10-15 years every country is bankrupt & we get taken over by a world government run by aliens put into work camps & worked till we die.

    Right i am off to find my tinfoil hat :eek:
     
  12. Happybunny macrumors 68000

    Joined:
    Sep 9, 2010
    #12
    You heard it here first folks,

    Go and Invest in Soylent Green.:eek:
    http://en.wikipedia.org/wiki/Soylent_Green
     
  13. jeremy h macrumors 6502

    Joined:
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    Location:
    UK
    #13
    Perhaps we should run DNA tests for things other than horse..? ;)

    It would solve the coming pensions disaster.
     
  14. Happybunny macrumors 68000

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    Sep 9, 2010
    #14
    As an Age impaired person I strongly object to that statement.:p
     
  15. James Craner macrumors 68000

    James Craner

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    #15
    To be honest the fact that the UK has lost it's AAA rating is more of a political issue than an economic one. When the USA lost it's AAA rating it's cost of borrowing actually went down. Only two significant Industrial economies still have a AAA rating - Germany and Canada.
     
  16. Wardenski macrumors 6502

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    Jan 22, 2012
    #16
    Doesn't bother me, I only use AA batteries anyway.

    Not sure what all the fuss is about.
     
  17. eric/ Guest

    eric/

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    Ohio, United States
    #17
    Sort of. See the thing is, is that the British economy is really not looking to good.

    Take a look at the industries in the British top 20 companies, and compare that to, say, the US or Germany.
     
  18. James Craner macrumors 68000

    James Craner

    Joined:
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    Location:
    Bristol, UK
    #18
    I was not commenting on the UK Economy, just that a downgrade from AAA does not make any significant difference to UK's ability to borrow. The UK has a tendency to lag behind the US economy in terms of economic cycles. The downgrade is more meaningful politically than any impact on the UK's recovery.
     
  19. RSL macrumors regular

    Joined:
    Nov 6, 2012
    #19
    UK can't produce competitively since the pound is overvalued. The overvaluation (to which the British have historically been attached) is due to the large capital flows into the UK financial services sector.

    (The proof for this is the astonishing fall in value of the pound at the beginning of the financial crisis: no one wanted to invest their money in the City.)

    The upside is that the City is now losing out to other financial centers, so probably within a decade or so the pound will come down in value (maybe matching the dollar). Really the pound should be worth less than the euro, since the UK doesn't really produce that many goods anymore.
     

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