George Osborne’s admission that he will not meet his target to have debt as a percentage of GDP falling by 2015/16 has serious consequences for one of his central messages. The Autumn Statement has led credit ratings agency Fitch to warn of a possible downgrade. The agency said:
‘Missing the target weakens the credibility of the fiscal framework, which is one of the factors supporting the rating.’
Ratings agencies aren’t the be-all-and-end-all by any means, and Osborne could quite easily point to just how wrong they were before the crash, giving collateralised debt obligations high ratings. But the problem is that the Chancellor tends to wheel out their approval to shore up his own position, pointing to the UK’s AAA rating as a sign that he is pursuing the right economic policy. If Fitch does strip Britain of its AAA rating, it will mean the Chancellor will have to change his message.
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