George Osborne on Britain’s credit rating

The 2010 Conservative Party General Election Manifesto made
safeguarding Britain’s credit rating the number 1 “Benchmark for
Britain”.

“Benchmarks for Britain. For the first time, the British people will
have eight clear and transparent benchmarks against which they can
judge the economic success or failure of the next government. We will
be accountable and open. These are the eight Benchmarks for Britain.
Achieving them over the next Parliament will mean we have put Britain
back on its feet and are building a new British economic model, very
different from the debt-driven economy of recent years.

Change the economy | Benchmarks for Britain

1. ensure macroeconomic stability: We will safeguard britain’s credit
rating with a credible plan to eliminate the bulk of the structural
deficit over a Parliament.”

2 . The Chancellor George Osborne has repeatedly hailed the views of
the credit rating agencies as the measure of success for economic
policy. When Britain was first put on negative outlook by Standard and
Poor’s in 2009, the then Shadow Chancellor George Osborne said that
the country’s “economic reputation is on the line” and called for an
early general election:

“It’s now clear that Britain’s economic reputation is on the line at
the next general election, another reason for bringing the date
forward and having that election now… For the first time since these
ratings began in 1978, the outlook for British debt has been
downgraded from stable to negative.” George Osborne, The Guardian, 21
May 2009,
http://www.guardian.co.uk/business/2009/may/21/standard-poors-uk-economic-outlook

3. When Britain was taken off negative outlook by the Standard and
Poor’s credit rating agency in October 2010, following figures showing
0.8% growth in the third quarter of 2010, George Osborne said it was a
“vote of confidence” in his policies:

“What you see today, in an uncertain global economic environment, is
Britain growing, growing strongly, the strongest growth we have seen
in this part of the year for a decade, and also our country’s credit
rating being secured. That is a big vote of confidence in the UK, and
a vote of confidence in the coalition government’s economic policies.”
George Osborne, The Guardian, 26 October 2010,
http://www.guardian.co.uk/business/2010/oct/26/gdp-growth-osborne-construction

4. In May 2011 George Osborne boasted that this move was thanks to the
Government’s policies and had delivered “economic stability”:

“Our credit rating had been put on negative watch. Now, however,
thanks to the policies of this coalition Government, Britain has
economic stability again.”
George Osborne, Hansard, 10 May 2011: Column 1011,
http://www.publications.parliament.uk/pa/cm201011/cmhansrd/cm110510/debtext/110510-0001.htm#11051066000485

4. But in February 2012 Moody’s put Britain on negative outlook,
citing “weaker growth prospects”:

“The key drivers of today’s action on the United Kingdom are: 1) The
increased uncertainty regarding the pace of fiscal consolidation in
the UK due to materially weaker growth prospects over the next few
years, with risks skewed to the downside. Any further abrupt economic
or fiscal deterioration would put into question the government’s
ability to place the debt burden on a downward trajectory by fiscal
year 2015-16.” Moody’s statement, 13 February 2012,
http://blogs.news.sky.com/therealeconomy/Post:a1b96258-7135-4f6b-8853-b33d8a30fce8

5. In May 2012, Fitch also put Britain on negative outlook, saying a
downgrade would be triggered if there was “a material downward
revision of the assessment of the UK’s medium-term growth potential”.

6. When Standard and Poor’s – which has subsequently put Britain on
negative outlook – reaffirmed Britain’s credit rating in July 2012
George Osborne claimed “the world has confidence” in his policies:

“On the day Britain welcomes the world to our country for the Olympic
games, this is a reminder that despite the economic problems we face,
the world has confidence that we are dealing with them.” George
Osborne, 28 July 2012,
http://www.bbc.co.uk/news/business-19025747

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