David Cameron warned that credit rating agencies are concerned
Fitch is the latest credit rating agency to warn the UK government about a potential reduction in the AAA credit rating currently enjoyed by UK sovereign debt. This comes only hours after David Cameron issued a desperate plea to the UK public and the UK business arena to back his plans to reduce the budget deficit by up to £60 billion this year.
Many people believe that David Cameron was "scaremongering" yesterday but today's announcement is a stark reminder that the UK sovereign debt situation is desperate. Many believe that Fitch is effectively prompting David Cameron and his coalition partners to not only slash public sector spending but also increase taxes by significantly more than has been indicated over the last few weeks. This in itself could pose major problems for David Cameron and his popularity with the UK public with many predicting that his "honeymoon period" will come to an end fairly soon.
It is difficult to overemphasize the critical nature of the UK national debt and the budget deficit which will have an impact upon the lives of millions of people in the UK for a generation to come. Even a £60 billion reduction in public-sector spending is nothing but a drop in the ocean in the overall picture but it is a step in the right direction.
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