It’s Friday, a rating agency has just issued a verdict on the British economy and sterling has slumped. That sounds bad – but is it?
Fitch has just put Britain on ‘rating watch negative’ which means there’s a "heightened probability" of a downgrade – Britain losing its AAA status.
Fitch blames the worsened picture which the Chancellor told us about in his Budget on Wednesday: lower growth than expected this year (and next) and the country’s debt pile growing for longer than he thought – and to a higher level.
But hang on a minute: Britain already has lost its ‘triple A’ status: Moody’s, one of the other big three agencies, knocked us down a peg last month.
Like Fitch, it also blamed the weak economic outlook but didn’t bother to hear just how bad the official figures were this week.
S&P is the remaining agency still to proffer an opinion but we can make an educated guess it will be similar in tone.
“What about sterling?”, I hear a strangled cry… Well, it did drop about $0.004 in the immediate aftermath of the news – but actually, the pound has had a good day and that still left it a third of a cent higher against the dollar on the day.
It has since made up all the ground it lost.
So when you boil it down, all we’ve had is a warning that Fitch might act in the next few weeks, based on news we already know.
Britain’s economy is indeed in a dire situation which keeps getting worse but if you’d been watching the ITV News coverage of the Budget on Wednesday you’d already know that.