Oh dear: UK more at risk than other major economies of losing top credit rating

[AtW]

The warning, which coincided with news that the biggest devaluation in the pound since the 1930s has failed to stem the rising trade deficit, is the latest blow for the UK's economic credibility.

David Riley, Fitch's co-head of global sovereign ratings, said that record levels of Government debt meant that unless the next Government makes serious efforts to bring spending under control and reduce that debt, Britain could lose its AAA rating.

"It's clear that the UK's ability to sustain large public fiscal deficits and a level of public debt without driving up interest rates and without putting sterling under significant pressure is much less than in the case of the US," he said. "If there was another significant fiscal stimulus package in the UK, then UK rating would be at risk."

More here: http://www.telegraph.co.uk/finance/e...it-rating.html

[cojak]

How would this impact the man/woman in the street if it happened?

[Mich the Tester]

How would this impact the man/woman in the street if it happened?

It would instantly cure his/her insomnia.

[TimberWolf]

Merv says we may get an inflation 'blip' too, but doesn't rule out more printing.

Does the European Central Bank set our interest rates yet? I haven't seen much on it reported in the press. And do all EU states have to have the same interest rate?

[OwlHoot]

Merv says we may get an inflation 'blip' too, but doesn't rule out more printing. ...

blip? More like a pig in a python, or rather a python trying to swallow a large pig.

[TimberWolf]

Stock market and other assets up, pound down. Anyone would think money was losing its value.

[TimberWolf]

blip? More like a pig in a python, or rather a python trying to swallow a large pig.

So where's your money stashed?

[centurian]

How would this impact the man/woman in the street if it happened?

Higher interest rates almost immediately.

Even so, government borrowing costs would probably still rise, so that would mean higher taxes, or big cuts in public spending to plug the gap.

For anyone that's been in debt, losing the credit rating is akin to when the banks pull the rug out from under you - making it much harder to get credit. At this point, you can't stick your head in the sand anymore. You either spiral into bankruptcy, or you make big changes to balance your budget.

It's a big deal if it happens and will destroy any budgetary plans the government has made.

[AtW]

At this point, you can't stick your head in the sand anymore.

can stick your head into guillotine

[DiscoStu]

Higher interest rates almost immediately.

Even so, government borrowing costs would probably still rise, so that would mean higher taxes, or big cuts in public spending to plug the gap.

For anyone that's been in debt, losing the credit rating is akin to when the banks pull the rug out from under you - making it much harder to get credit. At this point, you can't stick your head in the sand anymore. You either spiral into bankruptcy, or you make big changes to balance your budget.

It's a big deal if it happens and will destroy any budgetary plans the government has made.

Don't worry, Gordon will save us