Douglas Carswell's Blog

The debt data is grim

The Jubilee Concert was still in full swing when the news came through; Britain’s credit rating has been downgraded.

Okay, so it is a fairly tiddly sort of credit rating agency – Egan-Jones - one that few folk will have heard of. And, if you think about it, it is a pretty tiddly downgrade, from AA to AA-.

And yet .....

When it comes to sovereign credit worthiness, there seem to me to be only two sets of data that really matter; the rate at which a country’s debt increases V the rate at which the country’s economy grows.

It is these two sets of data that suggested that the Greek bailouts were doomed to fail from the start. It is these two indices that suggest that Spain, Italy and Portugal are unlikely to remain in the Eurozone – unless someone else can be persuaded to take over their debts.

Egan-Jones’ decision to downgrade UK debt should worry us because they believe that our debts will continue to rise rapidly, and our GDP stall or even fall. Forget all that spin about deficit reduction, they seem to be saying, the UK is getting deeper into debt as our national income falls.

At least the government has not spent two years bigging up the fact that we have a triple A credit rating, eh. That should help make things more manageable politically if Moody’s, Fitch and Standard & Poor’s were to follow suit ....

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