Could UK debt really be downgraded?
Today's news that the UK credit rating has been placed upon "negative watch" is obviously an unwelcome move which the UK government would rather have avoided. However, when you appreciate that UK debt is heading towards £1 trillion and the UK budget deficit is still around the £150 million level it is not difficult to see why credit rating agencies are concerned about the UK. But will the UK credit rating really be downgraded?
While the vast majority of experts in the UK would suggest that the UK rating will not be downgraded it would be foolish to totally discount this potential problem. When you look at the bare bones of the argument, the position of the UK economy and UK national debt is not exactly a confidence booster to investment markets. When you also take into account confusion regarding UK economic recovery in the short to medium term it is not difficult to understand why there is some concern.
It should become clearer over the next 12 months as to whether the UK will actually experience a double-dip recession or the recovery will gather pace and strength. However, to totally discount the potential for a credit rating downgrade is both foolish and dangerous.
Share this..
Related stories
Unemployment figures released in error
The Office for National Statistics is this evening under severe pressure after UK unemployment figures were released 24 hours early. However, the early release has not taken away the impact of the figures which showed a rise of 244,000 in the first three months of 2009 culminating in a total of 2.2 million people now out of work. While an investigation is underway within the Office for National St...
Read MoreGordon Brown shocked as recession continues
Today's GDP (Gross Domestic Product) figures for the UK issued a shock to Gordon Brown with confirmation that the UK economy fell by 0.4% in the third quarter against analysts hopes of a rise of 0.2%. A growing number of economists were certain that the UK was pulling out of the recession and would finally wave goodbye to the bad times and return to the growth path. So what does this mean for the...
Read MoreIrish banking sector in freefall
Yesterday saw a significant fall in the value of the Ireland's banking community on concerns that the short to medium term outlook is turning sour. Debt ratings agency Moody's took the red pen to the industry yesterday and reduced the ratings of all 12 banks operating in the country. This is a reflection of both the Irish economy as a whole and the Irish financial market with the Irish government...
Read MoreUK government under pressure to extend car scrappage scheme
As we indicated yesterday, the UK government is coming under increasing pressure to extend the £300 million car scrappage scheme which has seen a significant number of older cars scrapped in exchange for discounts on new vehicles. However, a 31.5% reduction in new car production in August has hit the UK car manufacturing sector very hard with fears of a return to the depressed situation experienc...
Read MoreWhere will sterling go in the short term?
Over the last few days it has become apparent that the Bank of England is becoming more and more downbeat regarding the UK economy and potential challenges in the short to medium term. Indeed Mervyn King has even floated the idea of reintroducing quantitative easing in the short to medium term if the problems within the Eurozone impact upon the UK economy and overseas trade. While sterling was...
Read More