Fitch has today followed Moody’s in downgrading Britain from AAA to AA+. The reason? George Osborne is borrowing far too much. In its verdict, it said that gross debt “will peak at 101% of GDP in 2015-16…and will only gradually decline from 2017-18.” The Chancellor, of course, had once set a rule to “ensure that debt is falling as a percentage of GDP by 2015”. This has been abandoned, and the downgrades are the consequence.
Fitch doesn’t break down its forecasts, but it’s likely they follow those made by Michael Saunders at Citi:-
For all Labour’s talk of austerity, George Osborne is borrowing more over five years than Labour did over 13 years. The Reinhart and Rogoff row is of limited relevance to Britain because as the above graph shows no one in the coalition is too worried about breaching a gross debt limit of 90pc of GDP. As Fitch says, Britain is heading for 101pc.
For all Labour’s talk of austerity, George Osborne is borrowing more over five years than Labour did over 13 years. The Reinhart and Rogoff row is of limited relevance to Britain because as the above graph shows no one in the coalition is too worried about breaching a gross debt limit of 90pc of GDP. As Fitch says, Britain is heading for 101pc.
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