UK credit rating downgraded. (Egan Jones)

[I1L2T3]

Who they?

 

I'll worry if S&P downgrade.

 

So the government's economic credibility relies on the discredited rating agencies?

 

The only reason to worry about S&P is if they downgrade that is the point where the public wakes up.

[MrSmith]

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.

 

You still haven't provided any details, you keep saying we should spend some more money that we don't have and it will create employment. What projects? Who will it employ? How will you ensure it’s the British unemployed that take the work? What are the consequences if it doesn’t create enough extra tax to pay the interest?

[I1L2T3]

You still haven't provided any details, you keep saying we should spend some more money that we don't have and it will create employment. What projects? Who will it employ? How will you ensure it’s the British unemployed that take the work? What are the consequences if it doesn’t create enough extra tax to pay the interest?

 

There are loads of potential projects. It's a case of picking the right ones. If I had my way the projects would be set up with a focus on providing apprenticeship opportunities for our 1 million 16-24 unemployed. That would reduce the number of low-end opportunities for immigrants.

 

The issue about future benefits is a very important one. I'm not just talking about infrastructure for the sake of it but quality projects with long-term benefits. If the long-term benefits aren't there then there is no point doing the projects. Off the top of my head we have in no particular order:

1. HS2

2. General rail upgrading, more electrification

3. Air capacity

4. Ports

5. Network infrastrucure, national high speed broadband rollout

6. National water infrastructure

7. Power grid infrastructure

8. Renewable energy

9. Other energy

10. Health infrastructure

11. Education infrastructure, especially in inner cities

12. R&D

13. Road upgrades

14. social housing

 

Spending on a lot of this has come to a virtual halt. Let's kickstart it and get the infrastructure we nee to move forward rather than letting it crumble around us

[WeX]

So the government's economic credibility relies on the discredited rating agencies?

 

The only reason to worry about S&P is if they downgrade that is the point where the public wakes up.

 

and what does that matter? If we are downgraded we pay more interest, so who cares if these agencies are discredited (in your view) if that means we retain our AAA credit rating and reap its benefits?

[I1L2T3]

and what does that matter? If we are downgraded we pay more interest, so who cares if these agencies are discredited (in your view) if that means we retain our AAA credit rating and reap its benefits?

 

Downgrade does not automatically equal more interest on gilts. The USA was recently downgraded. They don't pay more interest. Japan was downgraded in the 1990s. They now have the lowest bond yields of any major economic power.

 

This silly scare tactic will be revealed for what it is soon enough.

 

We are not like Greece, or Spain, or Italy. So stop pretending we are.