A rating agency thinks that the UK is out of control and that's a reason for them to downgrade UK government debt.
Right now the immediate implications of that are not at all clear: other factors are dominating interest rates. This could, then, be dismissed as of no consequence. I disagree. Whilst there are good reasons for thinking that rating agencies have got many things wrong in the past, not least in connection with the global financial crisis of 2008, the fact that one can now say that the quality of political decision-making and governance within the UK create sufficient grounds for reduced confidence in our debt is a matter of considerable significance. I explain why in this video:
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Hi Richard, if as we know the government doesn’t need to borrow in order to spend, could pay off the national debt tomorrow with a stroke of a keyboard and that Government debt and deficit spending is a subsidy to the private sector just how important are the rating agencies?
Might I suggest you search ‘tax research why we need the national debt‘ for a lot of answers?
I would have thought that the ratings agencies might have downrated us because of the simply awful and ineffective thing called ‘Companies House’ as well as the limited liabilities imposed on those who manage the companies?
And why downgrade Government debt?
I seem to remember the Conservatives winning an election back in 2010 on the back of a Labour Government would reduce the UK ratings. It made front page / BBC news for days. Then the UK was downgraded under George Osbourne and not a lot was said. Now downrated again and scarcely a passing mention. Strange that. I distinctly remember being told the whole world would fall in.
Oh, wait a moment, – this time the world has already fallen in but somehow the rightwing press couldn’t care less as their mates make their fortunes from Government contracts and the public sector gets destroyed.
Spot on
David Cameron once said I would reduce UK rating
He then managed it all by himself
Thanks Richard. I’ve seen it and do appreciate how useful the national debt (not least to a private pension holder like me) is. But, as there is zero danger of the government defaulting and the BoE could cover all government spending (if necessary) what use are the rating agencies?
Not much
Except as barometers
If they repaid the national debt through Q.E./monetisation it would represent a massive expansion in the money supply without a proportionate increase in workers pay it would drive income inequality even further. Everyone on a percentage; governments, banks, estate agents, lawyers fill there boots whilst everybody else’s share gets smaller.
It isn’t going to happen…