Credit rating downgrade leaves Osborn feeling moody

Credit rating downgrade leaves Osborn feeling moody

Moody’s one of the world’s largest credit rating agencies has downgraded Britain from a AAA rating to a Aa1 rating leaving Britain in the same situation as France and the USA where after they were downgraded in 2012 and 2011 respectively.  As seen in the USA and France the downgrade in the UK’s credit rating is unlikely to have much impact on the economy but it is still a huge blow for Chancellor George Osborn who has in the past pledged to keep the UK’s triple A rating and has used it a benchmark for the government’s economic competency.  Although more recently he has changed that line, saying interest rates on government bonds are more important when assessing the government’s economic policy.

The reason given by Moody’s for the downgrade was, “continuing weakness in the UK's medium-term growth outlook.”  So this can be claimed as a victory for Labour as they have constantly said that the government needs to concentrate on growth however further reading reveals this is far from a Labour victory.  As Moody’s predicts that on its current course, the UK will eventually regain its AAA status, and any relaxation in the deficit-reduction could lead to another downgrade.  So basically if Labours economic plan was followed our credit rating would be even lower, but this still does not hide the fact that even if this is not a win for Labour it is still a difficult loss for the Chancellor.  The news of the downgrade only added to the Chancellor’s woes as the sale of the 4g network came in £1 billion less than predicted however despite the mounting pressure he intends to stick with plan A which after reading what Moody’s have said is probably for the best.