UK credit rating downgraded by Moody’s UK credit rating downgraded by Moody’s
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  1. #1

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    Default UK credit rating downgraded by Moody’s

    *unionist trigger warning*


    - about time - how this basket case of a country has managed to stay at AA is beyond me. International creditors will now be looking for more interest on those loans. Interesting times...





    The UK’s credit rating was downgraded by Moody’s late on Friday evening as analysts at the agency warned of scarring to the country’s economy from the coronavirus pandemic.


    The rating agency cut its grade one notch to Aa3 — equivalent to a double-A minus rating from rival S&P Global — while adding that its outlook was “stable”.


    Moody’s said it believed growth would be “meaningfully weaker” than it had previously believed and that the country’s economy had been struggling even before the pandemic reached Britain.


    The coronavirus crisis is expected to weigh more heavily on the UK economy than other large developed nations, given its heavy reliance on services that require human interaction, the credit rating agency added.


    The quality of the UKʼs legislative and executive institutions has diminished in recent years


    Moody’s
    The agency also specifically pointed to what it called “the weakening in the UK’s institutions and governance”.


    “While still high, the quality of the UKʼs legislative and executive institutions has diminished in recent years,” it said.


    Pat McFadden, Labour treasury spokesman, said the downgrade was a damaging verdict on Boris Johnson and the Conservative party’s stewardship of the UK economy.


    “It is notable that the weakening of UK institutions and governance had been picked out as part of the reason for the downgrade,” he said. “The ideological attack on our institutions being waged from No 10 is now having a direct impact on the economy.


    “The prime minister should focus on securing the Brexit deal he promised rather than compounding the damage in the months ahead.”


    The Treasury said that the coronavirus pandemic had made a significant impact on public finances, but that things would have been far worse “had we not acted in the way we did to protect millions of livelihoods”.


    The Treasury said its priority was to protect jobs and businesses and that “over time and as the economy recovers, the government will take the necessary steps to ensure the long-term health of the public finances”.


    Sarah Carlson, an analyst with Moody’s, said the coronavirus-induced shock had brought new and considerable pressures on the UK economy.


    “Despite the projected recovery, we estimate a sharper peak-to-trough contraction for the UK than for any other G-20 economy,” she said.



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    FOLHH II

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    Not like you are gloating or anything...
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    Rating no longer matters since the main buyer is now BoE - there is zero rationale to buy into bonds with fook all interest and issued in non-reserve currency (like euro or USD) - currency risk (especially with Brexit) much higher than any interest that could be gained.

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    Why sovereign credit downgrades no longer matter as much as they used to

    Moody’s analysis would have made sense prior to the 2008 financial crisis. It does not make sense in today’s world, with historically low interest rates, long average bond durations and public debt still manageable. In short, the downgrade will not have any impact on the UK’s ability to borrow. The agency has not considered the current context or the broader historical picture, and its assessments are not as relevant as they once were.

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    Quote Originally Posted by scooterscot View Post
    *unionist trigger warning*


    - about time - how this basket case of a country has managed to stay at AA is beyond me. International creditors will now be looking for more interest on those loans. Interesting times...
    it's good that you buggered off to germany

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    It's less a problem of borrowing money than a prediction of how sh*te 2021 and beyond will be for "obvious" reasons that no-one wants to discuss.
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    I heard this before along the line we're now going to be using negative interest rates for the years ahead. While that is possible, it is not a world anyone wants to be a part of. Imagine acknowledging you live somewhere you know will be poorer with a falling standard of living one year after the next? That is what negative rates mean. That is why deflation economics don't work. When the government begins to increase taxes (and they will) and people are asked to work for longer, pay more interest* and tax for less - then you have a recipe for disaster. There'll be other parts of the world where this is just not the case. Look at the US, people are upping sticks are leaving California in their droves.

    Credit ratings right now don't matter until they matter, i.e. when the UK borrowing from international markets attracts more interest. And it will when the realisation a deflationary economy is not a way forward.


    * I can borrow £100k+ @ 0.25%!! and there's people out there paying 17% APR on a credit card - why are people not burning down buildings?
    Last edited by scooterscot; 22nd October 2020 at 10:07.
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    Quote Originally Posted by scooterscot View Post
    I heard this before along the line we're now going to be using negative interest rates for the years ahead. While that is possible, it is not a world anyone wants to be a part of. Imagine acknowledging you live somewhere you know will be poorer with a falling standard of living one year after the next? That is what negative rates mean. That is why deflation economics don't work. When the government begins to increase taxes (and they will) and people are asked to work for longer, pay more interest* and tax for less - then you have a recipe for disaster. There'll be other parts of the world where this is just not the case. Look at the US, people are upping sticks are leaving California in their droves.

    Credit ratings right now don't matter until they matter, i.e. the UK borrowing from international markets attracts more interest. And it will when the realisation a deflationary economy is not a way forward.


    * I can borrow £100k+ @ 0.25%!! and there's people out there paying 17% APR on a credit card - why are people not burning down buildings?
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    SO in summary Scoots has gotten it all wrong again?
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