Judgement on Brown's policies

This morning Standard & Poors made a judgement on the state of the UK economy. They have not reduced the prestigious AAA rating (unlike for Ireland and Spain where they reduced it to a mere AA), but they have voiced concern about the mounting debt and the UK's ability to service and repay it. It has taken a full month since the Budget but this is their conclusion.

They are not some international organisation, like the IMF which has also expressed warnings, nor a think tank. Since starting in 1978 they have advised would-be lenders to various countries of the risks in those countries. We are hoping to raise something like £200 billion this year, and the people who might lend will have heard the warning.

What the IMF and Standard and Poors have both said is that unless the UK makes immediate plans to reduce government debt there is a question of how risky any of their borrowing could be.

Standard and Poors even refer to what policies will be undertaken by an incoming UK government in 2010.

Does a reduction in credit rating cause concern to us? Yes - if we lose our AAA rating for the very first time, we shall find it harder, i.e. more expensive, to obtain. Given that we shall be desperately trying to find payment for the present debt figures, either by increased taxation or cutting public sector expenditure, or both, to have to find even more could be desperate.

The situation should worry Brown, as a verdict on his stewardship and at a time when he is still going for broke, and also Cameron, who may be called on to be hard in trying to deal with the problem caused by rampant government debt.