George Osborne defends austerity measures after threat to UK AAA credit rating

Published on Tuesday 14 February 2012 12:32

George Osborne defended the Government’s tough austerity measures after Britain was threatened with losing its coveted AAA credit rating amid fears over poor growth prospects and potential fall-out from the eurozone crisis.

Ratings agency Moody’s put the UK on “negative outlook” last night, increasing the chance of the country being stripped of its cherished status.

Shadow chancellor Ed Balls said the move was “a significant warning” and urged the Government to spark economic growth, but the Chancellor, Mr Osborne, said it was “a reality check for anyone who thinks Britain can duck confronting its debts”.

The Chancellor said: “We can’t waver in the path of dealing with our debts and here is yet another organisation warning Britain that if we spend or borrow too much we are going to lose our credit rating but, more importantly, what that leads to potentially is a loss of investor confidence in our economy.

“If people don’t invest in our economy, you don’t get growth and you don’t get jobs.”

Moody’s said there are a number of risks to the UK’s top rating, the first being a combination of slow growth with “reduced political commitment to fiscal consolidation” or a “failure to respond” to worsening conditions.

Other dangers were “a sharp rise in debt-refinancing costs, possibly associated with an inflation shock or a deterioration in market confidence over a sustained period” or a fresh crisis in the banking sector.

Significant structural reforms meant the economy was expected to return to 2.5 per cent trend growth rate even if more slowly than previously anticipated, Moody’s said.

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Charles P

Tuesday, February 14, 2012 at 08:43 PM

'Facts that winna ding, Geordie!' “If people don’t invest in our economy, you don’t get growth and you don’t get jobs.” Says the Bold Boy. People will not invest in a Country where there is no growth, basic business George, people invest for growth, no growth, no profits! Are we sure this man is in charge of the Treasury?

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mallus12

Tuesday, February 14, 2012 at 08:26 PM

I told you only a few days ago that Governments have no power to award themselves AAA status .It is the money markets and the " agencies" who decide. No matter how much the SNP blow-hearts demand this it will not lie in their hands. The money markets know a countrys credit-worthiness is the combination of many factors including some not in any Nation's control.

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KINGFISHER1

Tuesday, February 14, 2012 at 08:11 PM

So I put in the wrong vowel. I can use the REAL ACCURATE name. SILVERADO

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KINGFISHER1

Tuesday, February 14, 2012 at 08:09 PM

I am NOT pleased with the credit rating agencies. These were the Agencies which said all was well before the banking crash. TECHNICAL POINT. SOLVERADO

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The auld lies will nae wash any mair

Tuesday, February 14, 2012 at 06:32 PM

Last week the unionist scare story machine was telling us the unbelievable tale that an oil rich Scotland may not achieve a AAA rating when it regains its independence and this week we can see for ourselves that the reality is that the UK itself is on a shoogly peg and may not keep its AAA rating for much longer!

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