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R K

S&p: Uk Outlook Revised To 'negative'

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https://www.globalcreditportal.com/ratingsdirect/renderArticle.do?articleId=1403958&SctArtId=321408&from=CM&nsl_code=LIME&sourceObjectId=20008556&sourceRevId=204&fee_ind=N&exp_date=20250611-22:26:04

Long-term economic plan....blah blah oops!

Overview
  • We believe that the U.K. government's decision to hold a referendum on EU membership by 2017 indicates that economic policymaking could be at risk of being more exposed to party politics than we had previously anticipated, similar to the situation in the U.S. when we lowered that sovereign rating in 2011.
  • A possible U.K. departure from the EU also raises questions about the financing of the economy's large twin deficits and high short-term external debt.
  • We are therefore revising the outlook to negative from stable and affirming the 'AAA/A-1+' ratings on the U.K.
Rating Action
On June 12, 2015, Standard & Poor's Ratings Services revised its outlook on the United Kingdom to negative from stable. At the same time, we affirmed our unsolicited 'AAA/A-1+' long- and short-term sovereign credit ratings.
We also affirmed the 'AAA/A-1+' long- and short-term issuer credit ratings on the Bank of England (BoE) and the 'AAA/A-1+' ratings on the debt program of Network Rail Infrastructure Finance PLC. We have revised the outlook on the BoE to negative from stable.

In our opinion, there are important risks to the U.K.'s longer-term economic prospects should it leave the EU, with implications for external financing andthe role of sterling as a reserve currency, although this would also depend onwhat sort of relationship with Europe and the single market the U.K. could negotiate were it to leave the EU. The U.K. benefits from its flexible open economy, which we judge to have prospered inside the EU. We believe the U.K.'sEU membership has enabled the economy to attract higher inflows of low-cost capital and skilled labor than it would have attracted without access to the single market. It is our view that significant net immigration into the U.K. over the past decade has improved the sovereign's economic and fiscal performance.
For purposes of determining external vulnerabilities, we assess that the U.K. benefits from a reserve currency, alongside the U.S. and Japan. This leads to a more supportive external assessment, despite the U.K.'s very high net external debt. Under our methodology, were sterling's share of allocated global central bank foreign currency reserve holdings to decline below 3%, then we would no longer classify it as a reserve currency (sterling's share was 3.8% as of year-end 2014, according to International Monetary Fund data, compared with 52.5% for the U.S. dollar, and 4.0% for the Japanese yen). The loss of sterling as a reserve currency could lead us to lower the 'AAA' ratingon the U.K. by one notch.

Risk of Loss of reserve currency status - Nice one Dave/George.

Edited by R K

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Surely there's some mistake? Tory boys love, love, love the EU now. The City of London, the CBI, and the Bank of England insist upon it! :lol:

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The article refers to twin deficts and high short-term external debt. I guess they are the current account deficit and public sector net. But on the external debt I thought alot of debt was refinanced to longer maturities?

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By 2017 the argument around EU membership will have become a two sided argument as the full implications of leaving are heard. Up to now there has been 20 years of blah blah UKIP, blah blah immigration, blah blah Brussels gravy train and little else to contradict it.

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By 2017 the argument around EU membership will have become a two sided argument as the full implications of leaving are heard. Up to now there has been 20 years of blah blah UKIP, blah blah immigration, blah blah Brussels gravy train and little else to contradict it.

But only in the news papers I never read apparently. Mean while I hear scare stories from CBI and now OBR. Don't worry we wont leave the EU. The rich and powerful control the media and therefore the minds of the public.

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The article refers to twin deficts and high short-term external debt. I guess they are the current account deficit and public sector net. But on the external debt I thought alot of debt was refinanced to longer maturities?

I suspect they are referring to the capital a/c as corollary to the c/a deficit. i.e. the c/a deficit is effectively funded from our net suppliers e.g. germany (Merkel smiles at Tsipras just as widely as she does Dave)

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Cameron seems to have backtracked on his demands and merely gone for the four year benefit exclusion for migrant workers.

The idea of holding a referendum was a stupid one imo, it's the one thing that nearly swayed me to Labour. Unfortunately Labour just couldn't end the deficit denial...running a defict when the economy was beyond overdrive and house prices were tripling. Also continued to be tribal and only appealing to benefit lifers and the public sector...nothing for the remaining 70%.

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The idea of holding a referendum was a stupid one imo,

Why do you think that democracy is a stupid idea?

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Why do you think that democracy is a stupid idea?

Basically because they want a yes vote anyway and they will do their damdest to get it. In the meantime it will be a drag on UK plc.

And look where appeasing the electorate has got us, generational theft in the name of unfunded health and welfare. Because people want jam today and leave the bill for someone else.

Sure we need democracy, but we also need politicians that don't lie.

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Basically because they want a yes vote anyway and they will do their damdest to get it. In the meantime it will be a drag on UK plc.

And look where appeasing the electorate has got us, generational theft in the name of unfunded health and welfare. Because people want jam today and leave the bill for someone else.

Sure we need democracy, but we also need politicians that don't lie.

There is no bill and so it cannot be left for someone else.

I'm wondering whether it may be a good idea to hold an in/out referendum on the EU every 5 years, not just for UK but for all EU members, to reduce risks from static disequlibria & keep EU keen. If it's ok to chuck out domestic governance once every 60 months, why not European governance too.

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I'm wondering whether it may be a good idea to hold an in/out referendum on the EU every 5 years,

We just need a Get your Vote Off app for phones/tablets, with big YES/NO buttons - so big they can't be obscured by beer cans and stout bellies.

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We just need a Get your Vote Off app for phones/tablets, with big YES/NO buttons - so big they can't be obscured by beer cans and stout bellies.

For Kippers?

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