Tell us what you think the real consequences would be if Fitch did downgrade our AAA rating
The credit rating agency Fitch has said that Britain is at risk of a downgrade, after the Office for Budget Responsibility again cut its predictions for UK economic growth and George Osborne announced in his autumn statement that the government’s austerity programme would be extended until 2018.
The BBC explains: “A cut to the credit rating would mean that the country is perceived as more risky to lend to, thereby raising the cost of borrowing from international investors.”
The chancellor has always insisted that keeping Britain’s top AAA credit rating is a crucial reason to make spending cuts, however this morning he downplayed its significance. “It wouldn’t be a good thing but the credit rating is one of a number of ways in which people look at countries,” he said. “Because when people look around the world and they look at countries to invest in they think Britain is a good investment.”
Isabel Hardman writes on the Spectator’s Coffee House blog:
“Ratings agencies aren’t the be-all-and-end-all by any means, and Osborne could quite easily point to just how wrong they were before the crash, giving collateralised debt obligations high ratings. But the problem is that the chancellor tends to wheel out their approval to shore up his own position, pointing to the UK’s AAA rating as a sign that he is pursuing the right economic policy. If Fitch does strip Britain of its AAA rating, it will mean the chancellor will have to change his message … Expect more damage limitation exercises like the one attempted by Danny Alexander in August, in which Treasury ministers suddenly discover a new cynicism about the verdicts delivered by Fitch and other organisations.”
Previously, Mehdi Hasan has written for the Guardian about the power of the credit rating agencies Fitch, Moody’s and Standard & Poor: “By what right do they decide on the fate of governments, economies, debts and peoples?”
What do you think the real consequences – politically and economically – would be if Fitch does downgrade our triple AAA rating? Do you care what the credit rating agencies think of Britain?
• This is a Comment is free experiment – tell us if you would like to see a “Debate of the day” every day