Belfast Telegraph

Monday 22 September 2014

George Osborne 'is in denial' at loss of AAA rating

Under fire: George Osborne
Under fire: George Osborne

George Osborne has been labelled as the "downgraded Chancellor" and accused of being in "complete denial" over the loss of the UK's prized AAA credit rating.

Shadow chancellor Ed Balls yesterday claimed his opposite number was "just making it up as he goes along" and piled on the humiliation by reciting the Government's own words on the importance of the rating.

He told the Mr Osborne to get "out of denial" and come up with a new plan for jobs and growth.

"The downgrading of Britain's credit rating is, in this Chancellor's own words, humiliating for this Government," he told MPs.

But Mr Osborne, who arrived in the Commons chamber to answer an urgent question to chants of "resign" from the Labour benches, insisted the downgrade had not brought "excessive volatility" to the markets.

Ratings agency Moody's revised downward its verdict on the UK economy late on Friday, putting Mr Osborne under intense pressure.

The Tories put the safeguarding of Britain's credit rating as the top benchmark to judge its economic success.

Mr Balls said: "The first economic test he set himself – now failed by this downgraded Chancellor. And yet he remains in denial, offering more of the same failing medicine when even Moody's now agree sluggish growth is the problem."

Mr Balls said the Chancellor must put the national interest before his own political pride. He added: "He used to say a downgrade would be a disaster, today he says this downgrade doesn't matter – but he is still warning a further downgrade really would be a disaster.

"It is utterly baffling and illogical – he's just making it up as he goes along."

Mr Osborne said: "This ratings decision is a stark reminder of the debt problems built up in Britain over the last decade and a warning to anyone who thinks we can run away from dealing with those problems.

"And we will not do that. I can report that we have not seen excessive volatility in the markets."

He added: "The credit rating is an important benchmark for any country but this Government's economic policy is tested day in and day out in the markets and it has not been found wanting."

The pound came under further pressure against the euro yesterday, dropping to a 17-month low of 1.13, but held firm versus the US dollar at 1.51.

It was already at a 31-month low against the greenback after it emerged last week that Bank of England Governor Sir Mervyn King is in favour of more emergency support for the UK economy.

The overseas dominance of the FTSE 100 Index, with an estimated two-thirds of its earnings derived outside the UK, meant the downgrade did not prevent the top flight from rising back towards its recent five-year high.

The Chancellor told MPs that Moody's had pointed to slow growth in the global economy and the winding down of huge debts as the reasons behind the downgrade.

He accused Mr Balls of being the "architect" of the problems that led to Britain's economic crisis.

COMMENT RULES: Comments that are judged to be defamatory, abusive or in bad taste are not acceptable and contributors who consistently fall below certain criteria will be permanently blacklisted. The moderator will not enter into debate with individual contributors and the moderator’s decision is final. It is Belfast Telegraph policy to close comments on court cases, tribunals and active legal investigations. We may also close comments on articles which are being targeted for abuse. Problems with commenting? customercare@belfasttelegraph.co.uk

Comment

More

Company Profiles

More

Help & Advice

More

People on the move

More