UK Economic Outlook Downgraded to ‘Negative’ by Rating Agency

THE GUARDIAN: Moody’s say downgrade from ‘stable’ was driven by political instability and high inflation

The UK’s economic outlook has been downgraded from “stable” to “negative” by the rating agency Moody’s because of political instability and high inflation.

Moody’s said the change in outlook was driven by “heightened unpredictability in policymaking amid weaker growth prospects and high inflation” and “risks to the UK’s debt affordability from likely higher borrowing and risk of a sustained weakening in policy credibility”.

Rating agencies rate a country on the strength of its economy and provide governments with a score based on the likelihood that they will be able to pay back debt.

The rating affects how much it costs governments to borrow money in the international financial markets. According to the agency, an outlook period “typically lasts 12 to 18 months”. » | PA Media | Saturday, October 22, 2022

Good God! Brexit is proving to be a rip-roaring success, isn’t it? Britannia is sinking faster than many might have imagined. To anyone with a modicum of common sense and even a basic understanding of economics should have been able to foresee the dire outcome that Brexit would bring with it.

I am almost certain that there were many pro-Brexit voters who thought that by exiting the European Union, we would be able to rebuild El Dorado! The sad reality is that we are quickly turning this once proud nation into a Banana Republic (without even being able to grow the bananas)!

The trouble is that the many are going to have to suffer along with the few that brought Brexshit about. That means to say, the Remainers and the unsuspecting Brexiteers who believed the crap that was preached to them by the few at the top who would be benefitting from leaving our friends in Europe.

I suggest that we prepare ourselves to eat humble pie, ask for forgiveness for causing our European brothers and sisters so much trouble and ask them to accept us back into the fold without all those ridiculous opt-outs. Oh, and while we’re at it, we could ditch the pound sterling (which is fast turning into a junk currency) and adopt the euro.

If you think that I exaggerate about the pound turning into a junk currency, just take a look at this website providing historic currency conversion rates. This is proof positive that the currency we could once upon a time be so proud of is becoming ever more worthless. Ditch the bitch! This is surely not the end of its decline in value. Historically, the pound has halved in value approximately every ten years since the end of World War I. So, based on that harsh historical reality, in ten years (or perhaps even less now), the pound could be halved in value yet again. Remember this: In 1963 (as an example), there were approximately CHF 12.24 to the pound and US$ 2.80 . And now, the Swiss franc is worth approximately 87p, or put another way, a pound will buy you approximately CHF 1.27 and US$ 1.30 ! I wouldn't characterise such a currency as anything but weak. It has been weakening for years; Brexit has hastened its decline in value. – © Mark Alexander

George Osborne Insists He Won't Change Course Despite Credit Rating Downgrade

THE GUARDIAN: Chancellor says he 'cannot let up' after move by Moody's which opposite number Ed Balls calls 'humiliating'

The chancellor has insisted that he will not change course despite the downgrade of Britain's credit rating in which he invested great political capital in maintaining.

George Osborne said Britain's situation would get very much worse if the government changed course after Moody's changed Britain's rating from AAA to AA1. The chancellor said previously the rating agency's triple-A rating was an endorsement of his austerity policies.

As far back as February 2010, he told an audience of Tory activists: "What investor is going to come to the UK when they fear a downgrade of our credit rating and a collapse of confidence?" In the Tory manifesto, published weeks later, he said: "We will safeguard Britain's credit rating with a credible plan to eliminate the bulk of the structural deficit over a parliament."

Ed Balls ,the shadow chancellor, described the downgrade as a "humiliating blow" for Osborne who was "ploughing on regardless with a plan which is not working".

In an interview at 11 Downing Street on Saturday, Osborne said: "I think we've got a very clear message, a loud and clear message that Britain cannot let up in dealing with its debts, dealing with its problems, cannot let up in making sure that Britain can pay its way in the world.

"What is the message from the ratings agency? Britain's got a debt problem. I agree with that. I've been telling the country for years that we've got a debt problem, we've got to deal with it."

Labour insisted the government had withdrawn demand from the economy which had slowed growth and increased the debt. » | Conal Urquhart, staff and agencies | Saturday, February 23, 2013

From Stable to Negative: Moody's Cuts Outlook for Germany's Top Rating
SPIEGEL ONLINE INTERNATIONAL: The debt crisis is threatening Germany's top credit rating. Moody's changed its outlook for Germany, the Netherlands and Luxembourg to negative from stable late on Monday. The German Finance Ministry said the country would remain an anchor of stability in the 17-nation euro zone.

Moody's Investors Service on Monday cut its outlook for Germany's creditworthiness to "negative" from "stable," but confirmed the country's triple-A rating.

Moody's also cut its outlook for the Netherlands and Luxembourg, which also have triple-A ratings, to negative from stable. Finland kept its stable outlook.

The ratings agency said the move was due to growing uncertainty caused by the debt crisis.

It said there was an increased chance that Greece could leave the euro zone, which "would set off a chain of financial sector shocks ... that policymakers could only contain at a very high cost."

It also warned that Germany and other countries rated AAA might have to increase support for ailing countries such as Spain and Italy. The burden of that support would fall most heavily on the euro zone's top-rated states, it said. » | cro -- with wire reports | Tuesday, July 24, 2012