Brown’s nemesis awaits — and his name is Brian

Matthew Lynn

23 May 2009

Matthew Lynn identifies the men who may soon declare the British government incapable of repaying its debts

Who will finally sit Gordon Brown down with a bottle of whisky, a loaded revolver and a copy of his own book on courage, and tell him the game is up? You might imagine the task would fall to Jack Straw, flanked by a couple of union bosses. In fact, it’s more likely to be three men you’ve never heard of: Frank Gill, Arnaud Mares and Brian Coulton.

Working respectively for the ratings agencies Standard & Poor’s, Moody’s and Fitch, this trio have the job of deciding whether the UK can pay back the hundreds of millions of pounds Brown’s government is borrowing every day through the gilts market in order to keep afloat. One day soon, it may be their job to declare that it can’t. ‘Britain should lose its triple-A rating,’ said Stuart Thomson, a bond fund manager at Ignis Asset Management, which has £70 billion under its control. ‘If the ratings agencies were being honest, they would downgrade the UK.’

Indeed they would. The government is racking up debt at an alarming rate, has no plan for paying it off, and shows no inclination to develop one. There is little sign of willingness to shelve any major spending proposals. The three agencies have punished other economies for far lesser sins. But cutting the UK’s rating would have huge repercussions — for Brown, for the British taxpayer, and for the agencies themselves. It would send sterling reeling and plunge us back to the dark days of the 1976 IMF rescue. For a Prime Minister who spent ten years as Chancellor boasting about ‘prudence’ and ‘golden rules’, it would be hard to imagine a worse blow.

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