Standard & Poor has just become the first credit rating agency to downgrade the UK from a “stable” assessment to “negative” – and given that the Tory borrowing proposals until 2014 are virtually identical to Labour’s, it is a warning that should chill Cameron. It’s feasible to fund your government with IOU notes now, with the Bank of England printing money to buy them, and a global flight-to-safety making a bull market in bonds. But after the next election, with equity markets recovering and the QE policy exhausted, how will Cameron find buyers for the £150bn a year debt he currently envisages issuing?
The S&P note is not public, but I reprint here what it has told clients. Note it has not altered its AAA status, just its rhetotic and overall position. I’d be very intertested, as always, in what CoffeeHousers make of it:
“We have revised the outlook on the U.K.
Britain’s best politics newsletters
You get two free articles each week when you sign up to The Spectator’s emails.
Already a subscriber? Log in
Comments
Join the debate, free for a month
Be part of the conversation with other Spectator readers by getting your first month free.
UNLOCK ACCESS Try a month freeAlready a subscriber? Log in