Britians AAA Rating?

[Fittster]

George Osborne recently made a speech about maintain Britain AAA credit rating:

"Mr Osborne, who was speaking at the British Museum, invited voters to judge the success of a Conservative government on whether it could defend Britain’s credit rating."

Why does it matter?

It's the cost of borrowing that matters. Spain and Japan have credit ratings of AA, a notch below the UK, but 10 year Spanish government bonds yield just 4.1%, only 0.1 percentage points more than UK gilts, whilst 10 year Japanese government bonds yield only 1.4%.

As I understand it the rating is about the risk of default but the market looks at other areas when valuing gilts such as inflation. On that front Osborne appears to be happy to let inflation weaken the pound as it would help exporters.

So all this talking about ratings is a bit of a red herring. Yields are what really matter.

[jesusbuiltmycar]

Fittster said:

Spanish government bonds yield just 4.1%, only 0.1 percentage points more than UK gilts

Doesn't this simply indicate that the UK has effectively been downgraded already?

[madala]

....this country has become third world basket-case thanks to twelve years of Labour misrule......b'stards.

[Fittster]

jesusbuiltmycar said:

Fittster said:

Spanish government bonds yield just 4.1%, only 0.1 percentage points more than UK gilts

Doesn't this simply indicate that the UK has effectively been downgraded already?

I think it means that rating aren't all that important and it's therefore a bit silly for Osborne to get hung up about it.

[fido]

Yep, i suppose it's the difference between someone who's got the bailiffs about to kick the door in (Greece), and someone who's getting demanding letters through the door (UK) .. i think the UK still has the chance of proving itself as fiscally prudent if severe cuts are imposed by the next government .. but every car scrappage scheme is taking us closer to a CCJ.

Edited by fido on Thursday 4th February 11:37

[madala]

fido said:

Yep, i suppose it's the difference between someone who's got the bailiffs about to kick the door in (Greece), and someone who's getting demanding letters through the door (UK) .. i think the UK still has the chance of proving itself as fiscally prudent if severe cuts are imposed by the next government .. but every car scrappage scheme is taking us closer to a CCJ.

Edited by fido on Thursday 4th February 11:37

....let alone quantitive easing.....

[AndrewW-G]

Fittster said:

So all this talking about ratings is a bit of a red herring. Yields are what really matter.

Can we count on you to personally pay the difference?..................it may "only" be 1.4% or even .1%, but it’s still more, we need our government to reduce any none essential payments, allowing all tax receipts to be spent on things we as a country need, not on servicing the debt our fiscally inept labour government have signed us up to

[Bing o]

fido said:

but every car scrappage scheme is taking us closer to a CCJ.

I thought that they made £500 from each car that was scrapped?

[fido]

Bing o said:

fido said:

but every car scrappage scheme is taking us closer to a CCJ.

I thought that they made £500 from each car that was scrapped?

Yep, but how was the car funded in the first place i.e. where is the wealth generated to afford the shiny bit of metal? Not to mention where the shiny bit of metal is manufactured (if not the UK, then it's hitting the trade deficit).

Edited by fido on Thursday 4th February 12:48

[nonegreen]

madala said:

....this country has become third world basket-case thanks to twelve years of Labour misrule......b'stards.

Yeah cos destroying manufacturing had no effect on the economy did it (Thatcher)?

st bum and his mates have been running this country for 150 years. Time for a change.

[XJR40]

Now that is been annouced that the B of E are stopping QE, won't that lead to an increase in the bond yield anyway? Presumably they'll have to tighten at some point and sell the bonds back to the market to suck back up the new money they created especially if inflation kicks off. I guess it'll test the markets appetite for UK bonds.

[s2art]

nonegreen said:

madala said:

....this country has become third world basket-case thanks to twelve years of Labour misrule......b'stards.

Yeah cos destroying manufacturing had no effect on the economy did it (Thatcher)?

st bum and his mates have been running this country for 150 years. Time for a change.

I think you will find that the damage was done before Thatcher, she just had to tidy up the mess.



BTW 150 years? Where is that from?