UK credit rating downgraded. (Egan Jones)

[I1L2T3]

Who, exactly, are Egan Jones?

 

Just about the only rating agency with any credibility left.

 

Look them up.

[Jag82]

Who, exactly, are Egan Jones?

 

Not exactly Fitch or Moody's but then again that may be a good thing.

[I1L2T3]

Not exactly Fitch or Moody's but then again that may be a good thing.

 

No, they're certainly not Fitch or Moodys

[acman]

Just about the only rating agency with any credibility left.

 

Look them up.

 

Yes I1, I agree, they were ahead in downgrading Spain, the odd thing is that the last Spanish downgrade happened midweek, ususlly all rating agencies downgrade on Fridays, then all the 'big' agencies followed.

[studentbob]

The problem with the low interest rates is that one of the main domestic purchasers of gilts, the UK pension funds, are increasingly less interested. Worse still for pensioners because gilt yields are so low pension income will decrease. Less income - less spend in the UK economy.

 

The void will be filled be overseas gilt purchasers, increasing our overall exposure to international markets, made worse by Osborne and Cameron's incessant advertising of the UK as a safe haven.

 

It's a slow economic suicide.

 

Exactly. It just proves they are inept, as well as corrupt.

[andygardener]

Who they?

 

I'll worry if S&P downgrade.

[NorthernStar]

Who they?

 

I'll worry if S&P downgrade.

 

They won't be too far behind.

[Jag82]

Who they?

 

I'll worry if S&P downgrade.

 

 

Yeah S&P are right on the money aren't they?

 

S&P provided the equivalent of the Harrod's packaging for the financial equivalent of a mixture of dog turds and caviar (Sub Prime Collateralized Debt Obligations

 

That's where we came in remember ?

[MrSmith]

Whoops. George?

 

http://uk.reuters.com/article/2012/06/04/uk-unitedkingdom-rating-eganjones-idUKBRE8530ZR20120604

 

"The over-riding concern is whether the country will be able to continue to cut its deficit in the face of weaker economic conditions and a possible deterioration in the country's financial sector," Egan-Jones said in a statement.

 

"Unfortunately, we expect that the UK's debt/GDP (ratio) will continue to rise and the country will remain pressed."

 

So it appearing that cutting the deficit is important to keep our rating, and you want to increase it by borrowing billions more than we already borrow. Not a good idea.

[I1L2T3]

So it appearing that cutting the deficit is important to keep our rating, and you want to increase it by borrowing billions more than we already borrow. Not a good idea.

 

Actually, they are saying that if we continue as we are we there is a concern we won't be able to reduce the deficit.

 

So there needs to be another way. Growth.

 

Also, don't get confused between deficit and debt. Deficit is the annual gap in income and expenditure. Debt is the total amount of money owed.

 

If we say borrowed an extra £100bn for infrastructure at the current 1.5%-ish for gilts then the interest payment on that is £1.5bn a year which could easily be covered by efficiencies in other areas. That money could be borrowed and barely increase the deficit at all. In fact as the projects funded by the £100bn got going and established they could actually help reduce the deficit significantly by reducing unemployment, reducing welfare spend, increasing tax receipts and fostering economic growth. I know it's counter-intuitive but please give it a little thought.