Is the UK heading for a credit downgrade? Can Sterling hold?
Discussion
The BBC have confirmed today that not one but two Credit agencies are warning that the risks of the UK losing its AAA status are increasing despite the best efforts of the coalition government.
I think most observers would accept that Cameroon and Boy George are being far more responsible than the likes of Winkey and Darlings were when in office, and Moonpig and Ballsup would be given half a chance.
But are the efforts of the government sufficient? It this a recoverable position?
Is the UK returning to a balanced budget and rebuilding prosperity actually an achievable objective given the monumental overspending and overborrowing that took place during the twelve years of Labour misrule?
Or is the damage already beyond repair?
Can our economy get in front of the runaway train of debt and restructured debt that the UK faces in the coming years?
I genuinely do not know whether this is achievable.
I am interested to hear how others think this will pan out.
What is pretty certain is that the credit Agencies are doubtful.
A reduction in our AAA status could prove to be very expensive to the UK and possibly a sign of more serious concerns developing about the UK future viability.
Do we think one is coming?
And if there is a downgrade then as a standalone currency Sterling will come under pressure.
Can the UK withstand this?
Or is it the beginning of a gradual slide into a weak currency and all the consequences of a weak financial position to Imports, Exports and our national standard of living.
One thing is certain. This problem will not go away.
I think most observers would accept that Cameroon and Boy George are being far more responsible than the likes of Winkey and Darlings were when in office, and Moonpig and Ballsup would be given half a chance.
But are the efforts of the government sufficient? It this a recoverable position?
Is the UK returning to a balanced budget and rebuilding prosperity actually an achievable objective given the monumental overspending and overborrowing that took place during the twelve years of Labour misrule?
Or is the damage already beyond repair?
Can our economy get in front of the runaway train of debt and restructured debt that the UK faces in the coming years?
I genuinely do not know whether this is achievable.
I am interested to hear how others think this will pan out.
What is pretty certain is that the credit Agencies are doubtful.
A reduction in our AAA status could prove to be very expensive to the UK and possibly a sign of more serious concerns developing about the UK future viability.
Do we think one is coming?
And if there is a downgrade then as a standalone currency Sterling will come under pressure.
Can the UK withstand this?
Or is it the beginning of a gradual slide into a weak currency and all the consequences of a weak financial position to Imports, Exports and our national standard of living.
One thing is certain. This problem will not go away.
Steffan said:
Do we think one is coming?
This autumn?Being serious for a second, my understanding is we are on "negative watch", meaning there's a 30% of being downgraded within a timeframe, three years being the one I've seen mentioned. With a "glass half full" hat on, that presumably means there's a 70% chance we won't be downgraded, or is that being overly simplistic?
Not sure where it puts the coalition in all honesty. Opening the taps would be sheer madness, as that's what caused the problem in the first place. In a perverse sort of way, the negative watch could be argued as support for the ongoing reduction program. Don't suppose the opposition see it that way, but given their Monopoly Money approach to problems, I rather suspect had they remained in power we'd long since have lost our AAA rating. The only person on that side I'm even remotely prepared to listen to is Darling. He got shot down in flames for warning about the scale of the crisis, and I'd say it's a safe bet he was hamstrung at every step by Brown trying to save his own wretched skin in the run up to the election.
[Insert dramatic last line to close post]
s2art said:
My understanding is that the negative watch is due to the UK's exposure to the Eurozone. So its not really Sterling that is at fault. If the Eurozone goes belly up in a bad way then I would expect the UK credit rating to decline along with our economy.
This is my understanding as well.Couple of positive things, I think :
1. Jaguar Landrover are going to employ another 1000 workers and increase production due to massive demand from Russia and China for these British marques; although owned by Indian Tata this is good for our exports, although not sure why? Steffan?
2. Picked my car up from a well known TVR centre today, know the proprietor well and got talking about business and the economy. He knows a lot of engineers in many fields ( not just keeping TVRs on the road ty! ) and said that they are all at full capacity, and have never been busier. This has to be signs of 'green shoots' in our economy, long term ones too?
Half the battle I believe is getting a sense of positivity flowingthough the country. Get positive and we will move forward and out of this mess, despite what may happen in the EZ, IMHO.
Edited by steveT350C on Thursday 15th March 20:59
Job numbers this week are a misnomer - more people are employed this month than last month, and fewer people are "economically inactive". The private sector put on 45,000 jobs in the current report, which is great news.
Ratings agencies are becoming less and less relevant - look at what happened when the US lost its AAA rating.
Ratings agencies are becoming less and less relevant - look at what happened when the US lost its AAA rating.
davepoth said:
Job numbers this week are a misnomer - more people are employed this month than last month, and fewer people are "economically inactive". The private sector put on 45,000 jobs in the current report, which is great news.
Ratings agencies are becoming less and less relevant - look at what happened when the US lost its AAA rating.
You may well be right, the agencies could be a dying breed.Ratings agencies are becoming less and less relevant - look at what happened when the US lost its AAA rating.
Given the absolute disaster of the performance by the agencies in completely miscalling the entire Banking crisis I an surprised that anyone still listens to them at all.
My concern is really whether the UK economy can actually recover.
davepoth said:
Job numbers this week are a misnomer - more people are employed this month than last month, and fewer people are "economically inactive". The private sector put on 45,000 jobs in the current report, which is great news.
Ratings agencies are becoming less and less relevant - look at what happened when the US lost its AAA rating.
You may well be right, the agencies could be a dying breed.Ratings agencies are becoming less and less relevant - look at what happened when the US lost its AAA rating.
Given the absolute disaster of the performance by the agencies in completely miscalling the entire Banking crisis I an surprised that anyone still listens to them at all.
My concern is really whether the UK economy can actually recover.
Are the government actually driving our economy forward towards growth and surplus or is the reality that the damage made by the Blair/Brown conspiracy is such that recovery is beyond our leaders today?
Steffan said:
Are the government actually driving our economy forward towards growth and surplus or is the reality that the damage made by the Blair/Brown conspiracy is such that recovery is beyond our leaders today?
They are - the private sector is pushing on quite nicely, but we need to ditch a lot of public sector workers as well. The numbers are working out about right - losses in the public sector are being covered by private sector gains. The number of people who are economically inactive is shrinking too, which is also positive. The fundamentals are getting there; we're making more and more stuff. davepoth said:
Steffan said:
Are the government actually driving our economy forward towards growth and surplus or is the reality that the damage made by the Blair/Brown conspiracy is such that recovery is beyond our leaders today?
They are - the private sector is pushing on quite nicely, but we need to ditch a lot of public sector workers as well. The numbers are working out about right - losses in the public sector are being covered by private sector gains. The number of people who are economically inactive is shrinking too, which is also positive. The fundamentals are getting there; we're making more and more stuff. My concern is the drag o the still excessive public sector costs and Benefits society lifestyles. I am more sceptical, but I hope you are right.
Steffan said:
But are the efforts of the government sufficient? It this a recoverable position?
Is the UK returning to a balanced budget and rebuilding prosperity actually an achievable objective given the monumental overspending and overborrowing that took place during the twelve years of Labour misrule?
One thing is certain. This problem will not go away.
Please stop blaming Labour for everything, in terms of state expenditure (which includes benefits) we've been living way beyond our means for decades.Is the UK returning to a balanced budget and rebuilding prosperity actually an achievable objective given the monumental overspending and overborrowing that took place during the twelve years of Labour misrule?
One thing is certain. This problem will not go away.
So far we haven't seen any cuts, expenditure is up, though you could argue that it is up by slightly less than inflation thus a small cut in real terms.
The problem will only go away when our politicians and our electorate actually face up to the reality that we must live within our means.
Can you see any chance of that happening? Just look at the threads on Child Benefit!
The government have had many chances to swing the axe. As soon as they got in they could have cut massively and blamed the previous lot, the financial problems in the world, simplification of processes, etc but they fluffed it. Now its harder to do. In another years time they'll be worrying about the election and it will drift... again.
They'll be serious when they:
- balance the budget, which means minimal (or zero) state borrowing that year
- actually cut red tape
- stop all the little extras that have crept into the benefit system such as free bus passes and free TV licences
- raise the state pension age to something like two thirds at 70 and full pension at 80
- cut the numbers in higher education from a blatant attempt to hide youth unemployment of 50 percent to something that is actually justifiable like the 5 percent it used to be.
- cut state housing (there isn't a shortage, we just need to think a bit about who qualifies)
- stop child benefit and family tax credit
- increase the personal tax allowance to compensate for the above cuts (for those who actually work that is, if you don't you won't be compensated by this)
cymtriks said:
Please stop blaming Labour for everything, in terms of state expenditure (which includes benefits) we've been living way beyond our means for decades.
This totally. Labour were about as financially adept as a spacker with an abacus, but making them a scapegoat and not drilling into the detail which shows we are still delusional in regard to our public spending is not giving the coalition the hard time it thoroughly deserves.cymtriks said:
The problem will only go away when our politicians and our electorate actually face up to the reality that we must live within our means.
And therein lies the rub - who's going to tell the spoilled brat generation(s) that time's up and risk never being elected again?cymtriks said:
Steffan said:
But are the efforts of the government sufficient? It this a recoverable position?
Is the UK returning to a balanced budget and rebuilding prosperity actually an achievable objective given the monumental overspending and overborrowing that took place during the twelve years of Labour misrule?
One thing is certain. This problem will not go away.
Please stop blaming Labour for everything, in terms of state expenditure (which includes benefits) we've been living way beyond our means for decades.Is the UK returning to a balanced budget and rebuilding prosperity actually an achievable objective given the monumental overspending and overborrowing that took place during the twelve years of Labour misrule?
One thing is certain. This problem will not go away.
So far we haven't seen any cuts, expenditure is up, though you could argue that it is up by slightly less than inflation thus a small cut in real terms.
The problem will only go away when our politicians and our electorate actually face up to the reality that we must live within our means.
Can you see any chance of that happening? Just look at the threads on Child Benefit!
The government have had many chances to swing the axe. As soon as they got in they could have cut massively and blamed the previous lot, the financial problems in the world, simplification of processes, etc but they fluffed it. Now its harder to do. In another years time they'll be worrying about the election and it will drift... again.
They'll be serious when they:
- balance the budget, which means minimal (or zero) state borrowing that year
- actually cut red tape
- stop all the little extras that have crept into the benefit system such as free bus passes and free TV licences
- raise the state pension age to something like two thirds at 70 and full pension at 80
- cut the numbers in higher education from a blatant attempt to hide youth unemployment of 50 percent to something that is actually justifiable like the 5 percent it used to be.
- cut state housing (there isn't a shortage, we just need to think a bit about who qualifies)
- stop child benefit and family tax credit
- increase the personal tax allowance to compensate for the above cuts (for those who actually work that is, if you don't you won't be compensated by this)
I do find the puerile refusal of New Labour to honestly admit their failure to manage the UL economy responsibly typical of the fecklessness of modern UK politicians. And I do find Ed Balls Up and Moonpig pathetic and transparently self serving.
However I agree the current government is talking a strong economic policy but not delivering it.
That is why I am asking whether the economy can recover currently.
From your post I assume you think not?
How do we get the government to actually address the difficult questions?
That is my concern.
Digga said:
And therein lies the rub - who's going to tell the spoilted brat generation(s) that time's up and risk never being elected again?
Indeed, just have a look at the 'Child Benefits' thread - it's akin to taking sweeties from the sticky grasping hands of a spoilt child. Replace 'riots' with 'protests' and they aren't much easier to deal with than the underclass, who invariably vote Labour anyway. If we want Scandinavian levels of benefits then we'll need to have their extortionate levels of income taxes - and slash benefits.Edited by fido on Friday 16th March 11:00
fido said:
Indeed, just have a look at the 'Child Benefits' thread - it's akin to taking sweeties from the sticky grasping hands of a spolit child.
I think you'll find it's just people fed up with hitting middle England again and not sorting out the real issues in the country's benefits culture.Steffan, do you actually want to whole thing to collapse? Nearly every thread I have read of yours is about the Euro going or the UK falling deeper into recession, Pound weakening etc
Whilst I do find the threads interesting you seem to almost wish for something cataclysmic to happen
I hope to god it doesn't personally
Whilst I do find the threads interesting you seem to almost wish for something cataclysmic to happen
I hope to god it doesn't personally
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