Belfast Telegraph

Friday 19 September 2014

Downgrade's silver lining

The loss of the UK's AAA credit rating is being touted as a shock to the financial system but it is not. The ratings agencies already had the UK on negative outlook so it is no wonder that another dip into negative territory for GDP brought about the first downgrade since 1978.

Of course, that's not to say that official word of Moody's decision won't have a negative impact. The pound has taken a hit, losing more ground against both the dollar and euro.

That's good news for exporters, particularly Northern Ireland exporters who depend on sales to the Republic.

The move has also prompted the Bank of England's Monetary Policy Committee to get creative.

Paul Tucker's suggestion that negative interest rates should be considered is, frankly, astounding.

But who's to say it wouldn't work?

By charging commercial banks to deposit money at the central bank, they would be encouraged to lend more, to get the economy moving.

It's often said the darkest hour is before dawn.

Perhaps the economy had to be downgraded before recovery.

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