23 february 2013, zzz

So, my prediction of doom (6 january 2010), that the uk will lose its aaa rating, has finally come to pass. However, it is just one agency, one notch and many years on, and so more like a rap on the knuckles than a hanging at dawn. Worth recalling too that in the intervening period no less an economic powerhouse than the usa also lost its - we must always say "prized" - aaa status; and walls have not come crashing down just yet. Sterling though, not being the dollar, will certainly take a big hit on this though, especially after taking one last week after it emerged that the bank of england is moving in the direction of printing yet more money. For domestic politics, it will be a big stink as the opposition make hay. Early in his tenure the finance minister (a local mp here, george osborne) put quite a lot of the justification for fiscal consolidation on keeping the aaa rating, and so that will rebound now on an already-damaged politician, and there's probably another helping to come if we discover soon we are in a triple dip recession, which is as likely as not. With even the likes of moodys and the imf hedging their bets in saying too much pain, the pressure will be on more than ever this budget season, but as there's really no turning back now, economically or politically, that may just set up a "no turning back" moment, as osborne's party were always going to stand or fall on whether the economy is perceived as having sufficiency turned around by the next election (7 may 2015) or not, and this is just really doubling down, as I think the latest americanism to get broad acceptance on these shores has it. We shall see.