Citi: Osborne “no longer has credible plans” to tackle debt

Britain will lose its AAA rating within 18 months because George Osborne ‘no longer has credible plans to put the debt/GDP ratio on a stable or declining path’ according to Citi. Its verdict is worth reading in full (pdf) and is important because it adds weight to the idea that — as a result of Osborne’s lack of progress on the deficit — 2013 will be the year of the British downgrade.

What did it for Michael Saunders, the Citi analyst, was seeing Osborne take what James Forsyth refers to in this week’s political column as the St Augustine approach to deficit reduction: ‘Lord, let me balance the books but not yet.’ This eats away at Osborne’s credibility. Saunders says that, now,

‘The UK no longer has credible plans to put the debt/GDP ratio on a stable or declining path in our view, given that roughly half of the planned fiscal tightening is scheduled beyond the next election and beyond the end of the current detailed spending plans.