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Monday, September 20, 2010

AAA Rating Stays

Not everything about the UK economy is doom and gloom, that at least is the verdict of Moody's who have kept Britain's credit rating at AAA.

Moody's is of the view that the British economy is strong enough to withstand George Osborne's austerity package.

Had Moody's downgraded their rating, the cost of servicing the UK's debt would have risen.

However, Moody's did issue a cautionary "sting in the tail" of their rating. They noted, quite correctly, that the UK has used up its protective "cushion"; ie the "rainy day" money has more or less gone.

This means that if the UK suffers another economic shock, it may not be in a position to withstand it.

Time will tell as to whether Moody's are right, and as to whether the government can manage the economy and the political backlash from the austerity measures.

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