The shadow chancellor Ed Balls has responded to Standard & Poor’s putting Britain’s credit rating on negative outlook:
George Osborne is now failing on all the tests he set for his economic policies.
A week after having to admit he won’t balance the books or get the debt down by 2015, we have the unprecedented situation of all three main credit rating agencies putting Britain on negative outlook.
It is worth mentioning, as Standard & Poor's revises the UK's outlook to negative, that in the G7 only three countries - the UK, Canada and Germany - still have a AAA rating from all three main agencies.
The Standard & Poor's credit rating agency's revision of the UK's outlook from stable to negative is the third such blow for the British economy this year:
- Moody's rating agency placed the UK on negative outlook in February
- In March, the Fitch agency followed suit, dropping the UK's outlook from stable
- S&P today completed the trio of agencies warning that the UK's coveted AAA rating is in danger
On the only previous occasion S&P dropped the UK's outlook from stable to negative, George Osborne - then the shadow Chancellor - was quick to highlight its significance:
– George Osborne - speaking in 2009
It's now clear that Britain's economic reputation is on the line at the next general election, another reason for bringing the date forward and having that election now.
For the first time since these ratings began in 1978, the outlook for British debt has been downgraded from stable to negative.
The comments are in marked contrast to his recent views on the issue.
Last week the ratings agency Fitch warned that the Government's missing its debt target "weakens the credibility of the UK's fiscal framework, which is one of the factors supporting the [AAA] rating".
But the Chancellor, in a marked change of tone, insisted that "the credit rating is one of a number of ways in which people look at countries."
A look at the press release issued by the credit rating agency Standard & Poor's, revising the UK's outlook to 'negative':
S&P has also put the Bank of England's own AAA rating on negative watch. That has got to hurt.
The Treasury says that Standard & Poor's endorse the Government’s "strong commitment to implementing the fiscal mandate".
But they won't like this from S&P: "The Government's efforts over next few years to engineer planned correction in the UK's accounts will likely drag on growth."
The Standard & Poor's credit rating agency has a happy, cheery message for the UK - the nation has been put onto a negative outlook.
It is not a downgrade, but it means there is an increased chance of one.
That means all three main ratings agencies have us on negative outlook. In human speak, that means there's a one in three chance of an S&P downgrade.
It is worth mentioning that credit agencies' records at prediction are not exactly fantastic, but they still have influence.