News Column

Finance Minister on the Defensive After Britain Loses AAA Rating

Feb. 23, 2013
moody's ratings, britain downgrade

London (dpa) - British Finance Minister George Osborne defended the government's handling of Britain's debt and deficit problems on Saturday, a day after Moody's ratings agency downgraded the country's credit citing "subdued" growth prospects and mounting debt.

"The test of our credibility as a country is there every day in the markets when we borrow money on behalf of this country from investors all around the world," said the chancellor of the exchequer.

"At the moment, we can do that very cheaply with very low interest rates precisely because people have confidence that we have got a plan" to address Britain's economic concerns, Osborne said.

Since the beginning of the financial crisis in 2008, Britain has seen its debt grow to an estimated 86 per cent of its gross domestic product (GDP).

Moody's on Friday lowered Britain's top AAA credit rating to AA1 - the first time the country had been stripped of the top rating - a blow to Osborne, who had pledged to protect the status while implementing the conservative government's austerity measures.

Prime Minister David Cameron, who took office in 2010, has tried to get the country's debt under control by drastically cutting the budget. So far, that has not yielded results.

"I don't think anyone looking at what this government has done over the last couple of years would say we've run away from those problems, (say) we haven't taken the difficult decisions," Osborne said.

Britain's budget deficit is expected to grow by nearly 7 per cent this year, according to experts. The country is heading towards its third recession in four years as GDP growth shrinks.

The pound also has lost value in the last several months against the euro and the dollar. Britain's central bank recently admitted that inflation would not be 2 per cent as projected, rather more like 3 per cent.

Source: Copyright 2013 dpa Deutsche Presse-Agentur GmbH

Story Tools Facebook Linkedin Twitter RSS Feed Email Alerts & Newsletters