UK govt deb downgrade and national savings

Kiri

Hi, I was wondering whether anyone knows what the implications would be if you have put money into 100% guaranteed places like Northern Rock or National Savings and then the UK debt rating is downgraded to below AAA - does this mean they will no longer be 100% guaranteed? Thanks! Kiri

purch

does this mean they will no longer be 100% guaranteed?

They will still be 100% guaranteed.

It's just a sign that in the opinion of one or more of the rating agency's the guarantee might not be worth much anymore.

P.S. These are the same rating agency's who saw no real trouble whatsover with the Banks before they got into trouble, :eek:so their opinions might be worth taking with a pinch of salt (or ignored altogether )

Masomnia

Is it concievable that interest rates would have to rise to incentivize people to keep their money in such products?

purch

If a downgrade did occur, then quite reasonably you should expect/demand a higher return in relation to other products.

Reaper

It might have that effect on gilts. Less likely on savings accounts.

D1zzy

purch wrote: »

P.S. These are the same rating agency's who saw no real trouble whatsover with the Banks before they got into trouble, :eek:so their opinions might be worth taking with a pinch of salt (or ignored altogether )

Or even the same agencies who were at the root of the trouble; giving AAA ratings to "Toxic Debt" packages, that were effectively "junk", for fear of upsetting the banks & losing their custom. :eek: