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Thread: Britain Loses Its AAA Credit Rating

  1. #1
    Veteran Member Madeline's Avatar
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    Britain Loses Its AAA Credit Rating

    Britain lost her top-notch credit rating almost exactly 12 hours after chancellor George Osborne claimed that Britain’s economy was in decent shape to face the uncertainty caused by the Brexit vote.

    Here are the key reasons why S&P took this historic move:

    In the nationwide referendum on the U.K.’s membership of the European Union (EU), the majority of the electorate voted to leave the EU. In our opinion, this outcome is a seminal event, and will lead to a less predictable, stable, and effective policy framework in the U.K. We have reassessed our view of the U.K.’s institutional assessment and now no longer consider it a strength in our assessment of the rating.

    The downgrade also reflects the risks of a marked deterioration of external financing conditions in light of the U.K.’s extremely elevated level of gross external financing requirements.

    The vote for “remain” in Scotland and Northern Ireland also creates wider constitutional issues for the country as a whole.

    Consequently, we are lowering our long-term sovereign credit ratings on the U.K. by two notches to ‘AA’ from ‘AAA’.

    The negative outlook reflects the risk to economic prospects, fiscal and external performance, and the role of sterling as a reserve currency, as well as risks to the constitutional and economic integrity of the U.K. if there is another referendum on Scottish independence.
    Corporate governance expert Lucy Marcus points out that some UK companies could now face higher borrowing costs, following S&P’s move.
    https://www.theguardian.com/business...-business-live

    This means it will cost Britain more to borrow money in the future, and that its corporations and businesses will likewise face higher costs of capital.

    The S&P has downgraded Britain from AAA to A+, completely bypassing the AA rating. Standard & Poor's is not the only rating agency. Moody and Fitch's had both downgraded Britain's credit in 2013, but this is nonetheless quite serious bad news for the country.

    John Llewellyn, founder of Llewellyn consulting and a former chief economist of the Organisation for Economic Cooperation and Development, said the UK was heading into recession at a time when its economy was not fixed and the BoE appeared to be the only functioning authority.

    “We are more worried — for the UK, though importantly not for the world — than we were in 2008 or any other post-World War Two crisis,” he said. “The scale of all this will start to unfold in coming weeks.”
    https://www.theguardian.com/business...-business-live
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  2. #2
    Bizarroland Observer Thx1138's Avatar
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    This is getting UUUGE!

    Thx
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    Southern Strategy Liberal OldGaffer's Avatar
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    Trump needs to take another victory lap.

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    Veteran Member Madeline's Avatar
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    American auto sales to the UK are down. The ripple effect of this HORRIBLE decision may send the US into a recession.

    Brexit raises risk of global recession as financial markets plunge worldwide - Chicago Tribune

    http://www.vox.com/2016/6/24/1202472...ists-recession

    These people may be doomsayers, but I fail to see how Brexit can avoid causing a recession in the UK, at the very least.

    http://www.forbes.com/sites/maggiemc.../#604c73071b6d
    Last edited by Madeline; 27th June 2016 at 12:01 PM.
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    I'm sorry to hope for it, but the rest of the world needs this to be the worst decision that Britain has ever made, and manifest accordingly, so that it shuts down these reactionary separatist movements.

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    Wrinkly Member Dangermouse's Avatar
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    Britain has lost fifteen years worth of EU contributions in the last three days on the stocks turmoil.
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    Veteran Member bajisima's Avatar
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    Quote Originally Posted by Proletarian View Post
    I'm sorry to hope for it, but the rest of the world needs this to be the worst decision that Britain has ever made, and manifest accordingly, so that it shuts down these reactionary separatist movements.
    I have to think its one of those once in a century kind of things people have to get out of their system. Hate it has to be that way but there are a lot of angry, populist sorts out there who really like isolationism and anarchy. Seems to be a worldwide thing.
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  8. #8
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    Based on what?

    Rating agency S&P says EU referendum result is a ‘seminal event’ that means Britain no longer deserves a top credit rating

    This has a certain taint about it. Reprisals and intimidation from the elite have started.
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    Veteran Member Madeline's Avatar
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    Quote Originally Posted by Ginger View Post
    Based on what?

    Rating agency S&P says EU referendum result is a ‘seminal event’ that means Britain no longer deserves a top credit rating

    This has a certain taint about it. Reprisals and intimidation from the elite have started.
    Possibly you fail to grasp the role of a rating agency. They assign a value to the borrower, human, corporate or national, and lenders rely on them to make informed decisions as to where to invest. This is nothing new and the ratings agencies are not political.
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    On the Diversary Committe TennesseeRain's Avatar
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    Now, there's a real shocker.
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