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BoE's King-ratings agencies not about to re-rate UK
inspector_monkfish
Posts: 9,276 Forumite
10:06 23Feb10 BoE's King-ratings agencies not about to re-rate UK
LONDON, Feb 23 - Ratings agencies are bound to remain "somewhat uncertain" about the UK's fiscal position but the country is in no danger of a downgrade of its triple-A status, Bank of England Governor Mervyn King said on Tuesday.
With Britain's budget deficit expected to hit a record high above 12 percent this year, opposition politicians have raised the spectre of Britain losing its triple-A credit rating and facing a Greek-style debt crisis.
Asked by parliament's Treasury Committee whether rating agencies should be concerned, King said: "I don't believe the rating agencies are concerned, in the sense that they are not re-rating the UK and I would be very surprised if they were to do so."
He said that there were important differences between Britain and countries like Greece. For instance, Britain had its own currency and on average had longer maturity for its debt.
But he refused to be drawn on a political debate -- which he called overblown -- over when fiscal consolidation should start, just pointing out that spending cuts cannot be made immediately and take time.
"You certainly can't eliminate the deficit in one year, there has to be a programme announced that will start and continue right through the lifetime of the next parliament," he said.
ECONOMIC RISKS REMAIN
King said that while the serious downside risks of another Great Depression had diminished, the economy was not out of the woods yet.
Of particular concern, he said, was what was happening to the UK's main export markets, such as the euro zone.
The BoE paused its 200 billion pound asset-buying scheme to boost the economy earlier this month but King made clear the Monetary Policy Committee stood ready to restart the programme if conditions warranted.
MPC member David Miles said that, for him, the decision to pause in February had been finely balanced.
"It's a decision that is finely balanced, it's one we'll come back to in future meetings," he said. "If the news is that the economic outlook seems even weaker, inflation pressure is lower and that moves down that profile, I think there is (a) strong case then (for) expanding further the asset purchases."
LONDON, Feb 23 - Ratings agencies are bound to remain "somewhat uncertain" about the UK's fiscal position but the country is in no danger of a downgrade of its triple-A status, Bank of England Governor Mervyn King said on Tuesday.
With Britain's budget deficit expected to hit a record high above 12 percent this year, opposition politicians have raised the spectre of Britain losing its triple-A credit rating and facing a Greek-style debt crisis.
Asked by parliament's Treasury Committee whether rating agencies should be concerned, King said: "I don't believe the rating agencies are concerned, in the sense that they are not re-rating the UK and I would be very surprised if they were to do so."
He said that there were important differences between Britain and countries like Greece. For instance, Britain had its own currency and on average had longer maturity for its debt.
But he refused to be drawn on a political debate -- which he called overblown -- over when fiscal consolidation should start, just pointing out that spending cuts cannot be made immediately and take time.
"You certainly can't eliminate the deficit in one year, there has to be a programme announced that will start and continue right through the lifetime of the next parliament," he said.
ECONOMIC RISKS REMAIN
King said that while the serious downside risks of another Great Depression had diminished, the economy was not out of the woods yet.
Of particular concern, he said, was what was happening to the UK's main export markets, such as the euro zone.
The BoE paused its 200 billion pound asset-buying scheme to boost the economy earlier this month but King made clear the Monetary Policy Committee stood ready to restart the programme if conditions warranted.
MPC member David Miles said that, for him, the decision to pause in February had been finely balanced.
"It's a decision that is finely balanced, it's one we'll come back to in future meetings," he said. "If the news is that the economic outlook seems even weaker, inflation pressure is lower and that moves down that profile, I think there is (a) strong case then (for) expanding further the asset purchases."
Please take the time to have a look around my Daughter's website www.daisypalmertrust.co.uk
(MSE Andrea says ok!)
(MSE Andrea says ok!)
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Comments
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the country is in no danger of a downgrade of its triple-A status, Bank of England Governor Mervyn King said on Tuesday.
Merv stating the obvious again.
Didn't we all know this already though? (well, except for a few nutters on here and hpc)“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
HAMISH_MCTAVISH wrote: »Merv stating the obvious again.
Didn't we all know this already though? (well, except for a few nutters on here and hpc)
well i guess its nice to get confirmation from the man himselfPlease take the time to have a look around my Daughter's website www.daisypalmertrust.co.uk
(MSE Andrea says ok!)0 -
HAMISH_MCTAVISH wrote: »Merv stating the obvious again.
Didn't we all know this already though? (well, except for a few nutters on here and hpc)
Well Cameron and Osborne have said it repeatedly. Are you calling them nutters?
Feel free! They're been wrong on the crash all along, they've been wrong on what to do now and they've been wrong in their shrill wails about how Britain was about to implode like Greece.
Yet again someone who knows something about economics steps up and calls Cameron a !!!!. Strauss-Kahn's speech in Davos was funny enough, this is even better. Anyone want to defend the Tory economic policy? Anyone even know what it is this week?0 -
inspector_monkfish wrote: »well i guess its nice to get confirmation from the man himself
True enough.
Of course even the ratings agencies have come out and said they have no plans to downgrade.
Still, I'm sure neither of these things will stop somebody mentioning it in a thread as if it's inevitable.
Yet again..... :rolleyes:“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
HAMISH_MCTAVISH wrote: »Merv stating the obvious again.
Didn't we all know this already though? (well, except for a few nutters on here and hpc)
On the face of it Moodys (link) and S&P (link) disagree with you and Mr King and they're the ones that decide.
The problem in the UK isn't so much the stated level of Government debt so much as the lack of any kind of a plan to stop borrowing let alone start repaying.
Don't assume that inflation is going to pay off the debt. M4 money supply is barely rising despite record low base rates plus QE across the world and I can see no drivers of inflation - falling sterling is more likely to cut living standards than increase wages and thus push up inflation. With unemployment at 2,500,000 on the official count plus assorted other skivers, early retired due to no jobs, women leaving the workplace due to no work etc you won't be seeing massive pay rises outside the financial sector in the near future.0 -
Paper currencies.....blah....blah.....intrinsic value......blah....blah.....worthless......blah.....blah.....inevitable.
There you go.All I seem to hear is blah blah blah!0 -
So you really expect Merv to sit there and say the UK is going to get a downgrade, even if it was inevitable. He is there to support UK PLC not to say how bad things are.
It would be like a football manger at half time telling the team they might as well give up at 1-0 down ....0 -
No they don't......Reuters – The top sovereign credit ratings of Britain and the United States are not under threat of a downgrade, and only a worst case scenario foresees a cut by 2013, analysts from Moody’s Investors Service said on Friday.
“Only the UK and the U.S. are classified as ‘resilient,’ rather than ‘resistant.’ Their resiliency will be tested in the next couple of years, but for now they have a high degree of financeability and debt affordability,” the analysts said in a presentation.
There is no imminent threat of a downgrade.
And in fact, there is only a chance of a downgrade in the highly unlikely "worst case scenario".
Which is a far cry from the inevitability of downgrade portrayed by our more pessimistic posters.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
you are right to an extent but it would be a bit silly and totally discredit himself if he was making it up thoughstueyhants wrote: »So you really expect Merv to sit there and say the UK is going to get a downgrade, even if it was inevitable. He is there to support UK PLC not to say how bad things are.
It would be like a football manger at half time telling the team they might as well give up at 1-0 down ....0
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