UK credit rating downgraded

[dspp]

Any opinions out there on Moody's joining S&P & Fitch in downgrading UK's credit rating. Quote below & link are to Moody's themselves, not as interpreted through any media lense.

Moody's Investors Service, ("Moody's") has today downgraded the United Kingdom's long-term issuer rating to Aa2 from Aa1 and changed the outlook to stable from negative. The UK's senior unsecured bond rating was also downgraded to Aa2 from Aa1.

The key drivers for the decision to downgrade the UK's ratings to Aa2 are as follows:

1. The outlook for the UK's public finances has weakened significantly since the negative outlook on the Aa1 rating was assigned, with the government's fiscal consolidation plans increasingly in question and the debt burden expected to continue to rise;

2. Fiscal pressures will be exacerbated by the erosion of the UK's medium-term economic strength that is likely to result from the manner of its departure from the European Union (EU), and by the increasingly apparent challenges to policy-making given the complexity of Brexit negotiations and associated domestic political dynamics.

https://www.moodys.com/research/Moodys-downgrades-UKs-rating-to-Aa2-changes-outlook-to-stable--PR_372649

regards, dspp

[youfoolishboy]

My guess would be this certainly scaring the bejeezus out of me.
https://yougov.co.uk/news/2017/09/27/vo ... 43-22-24-/

[NeilW]

Any opinions out there on Moody's joining S&P & Fitch in downgrading UK's credit rating.

Not relevant to a sovereign monetary nation. QE demonstrates that the Bank of England has infinite capacity to swap X% term bonds for 0% permanent bearer bonds - thereby removing interest income from the private sector and pinning down rates.

Sterling can't go anywhere else because it is a non-convertible currency. At the top level it's either in HM Treasury, or its in the Bank of England which is owned by HM Treasury. The interest rate paid by government is therefore a political decision at all points of the yield curve - largely to prop up pension funds.

Ratings agencies have no sensible methodology for dealing with currency sovereigns. They have been pronouncing doom and gloom about Japan for decades and nothing much changes.