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Would a Lib Lab coalition see the UK credit rating downgraded?

There is growing concern within investment circles that a Liberal Democrats and Labour party coalition would lead to an immediate downgrade of the UK's AAA credit rating. This concern has been growing over the last few hours even though rumours suggest that the Conservative party is on the verge of announcing a deal which would give David Cameron the keys to number 10 Downing St. So is the UK credit rating in danger?

While only a few months ago a downgrade of the UK credit rating was not even a consideration, the truth is that today we stand on the verge of a significant shift in the UK economy. Despite the billions upon billions of pounds of taxpayer's money poured into the UK economy we have yet to see a worthwhile improvement in economic activity. Supporters will say that the UK economy has moved out of recession, which it has technically, but ultimately the recovery is fragile and in a worst-case scenario could be very short-lived.

Investment markets are well aware of the dangers of a government which does not include the Conservative party and the likelihood we could see another general election in just a few months. Confusion is the main enemy of the city but unfortunately this is currently available in abundance!

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