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Moody’s warns UK could lose AAA status

Well no-one could have seen this coming. Last month we commented on the Chinese rating agency Dagong downgrading the long term debt of the UK. At the time we speculated:

If history is any guide we can expect the likes of Moody’s and S&P to follow suit in the coming months.”

Well it turns out that history is a good guide. Today Moody’s have come out warning that:

“as we’ve been saying for a while, in a situation of lower growth combined with weaker than expected fiscal consolidation, we would reconsider our stance [on the UKs AAA status].”

Whilst it isn’t a downgrade or even putting the UK ‘on watch’, it is a shot across the bows of the government’s deficit/debt reduction plans. And as we’ve pointed out before the UK is pretty much at 0 growth when measured properly. We predict that by the end of the year the UK will officially be back in recession – leaving Osbourne et-al scratching their heads as to why they can’t ‘grow’ out of the problem of too much debt.

Also remember that this financial year hasn’t got off to a good start in reducing the deficit. In April the UK borrowed more in April than at any time in the history of the UK because of falling tax receipts.

This April saw borrowing hit £10bn compared to 7.3bn the previous April. The expected borrowing figure was for £6.5bn – that’s only a 50% increase over expected borrowing needs for the month. That’s some impressive deficit reduction plan Mr Osborne, no wonder Moody’s are starting to get a bit antsy.

The pound sold off against the dollar on the news and gold has held steady around the £940 level, still within spitting distance of its all time highs.

 

Link to this article: : http://www.goldmadesimplenews.com/gold/moody%e2%80%99s-warns-uk-could-lose-aaa-status-4044/

Posted by on Jun 8 2011. Filed under Analysis, Gold News. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

6 Comments for “Moody’s warns UK could lose AAA status”

  1. […] summer Moody’s threatened the UK with a ratings downgrade unless the economy grew faster and the government got the books in order […]

  2. […] in early June 2011 we wrote: Whilst it isn’t a downgrade or even putting the UK ‘on watch’, it is a shot across the bows […]

  3. […] Moody’s puts the UK and the Bank of England on ‘outlook negative’… Finally: Last summer Moody’s threatened the UK with a ratings downgrade unless the economy grew faster and the government got the books in order […]

  4. […] Moody’s puts the UK and the Bank of England on ‘outlook negative’… Finally: Last summer Moody’s threatened the UK with a ratings downgrade unless the economy grew faster and the government got the books in order […]

  5. […] summer Moody’s threatened the UK with a ratings downgrade unless the economy grew faster and the government got the books in order […]

  6. […] summer Moody’s threatened the UK with a ratings downgrade unless the economy grew faster and the government got the books in order […]

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