Would a reduction in the UK credit rating make a difference?
As UK national debt continue to spiral higher and higher there are serious concerns that the UK government is losing control. Many of the credit rating agencies have been examining the situation in the UK and there are suggestions we could see possible downgrades in the short to medium term. A downgrade on the U.K.'s credit rating will have a serious impact on the cost of finance and the length of time needed to pay what could be a debt in the region of £1 trillion to £3 trillion.
Those who sidestep the situation and suggest it could "never happen here" may well be in for a serious shock in the short to medium term if the UK situation was to go into meltdown. We have already seen the currency under extreme pressure, investors fleeing the UK shores and the banking sector in complete turmoil. Many see these situations as stage one of a more serious scenario for the UK economy and the future of the UK population.
A suggestion that "quantitative easing" is the only way to address the problem is causing more concern in investment circles as this is very much a worst-case scenario. If the economic downturn were to be prolonged in UK this would prevent the UK government from increasing taxes and put pressure on the ability to repay debt and interest.
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