Just agreed to join the cast of Radio Wales Sunday Supplement tomorrow morning to discuss the downgrading of the UK's Aaa credit rating by Moody's earlier this week. Also 'appearing' on Radio Cymru's Bwrw Golwg to discuss 'militarisation' of foreign aid budget. Great for me - getting straight back into big serious issues after a few days reading thrillers and playing a bit of golf in the sun. Have to get my thoughts in order.
At one level the credit rating downgrade is of very little consequence. Its been factored into the market for months. There can hardly have been an economist who didn't expect the downgrade. Many had expected it sooner. Some Treasury 'body language' had suggested to me months ago that this was almost inevitable. What matters of course is the interest rates the UK has to pay in the bond markets, and the downgrade is unlikely to have any effect on that. What matters is whether the markets have confidence in the UK's ability to come through the economic turmoil that's hitting most developed countries. I suspect the value of sterling early next week will concern the Chancellor more.
But in my world of politics, symbolism matters. Since before the last General Election, "maintaining our AAA rating" has been used so often as a Gov't objective that the downgrade carries much greater symbolic political significance than its economic impact should justify. That's politics though. I'm on with an economist on Sunday Supplement. Be interesting to hear his take on things.
Normally, such a symbolic disappointment for a Gov't would be damaging. But thanks to the nonsensical response of the Shadow Chancellor, the Opposition are in a hopeless position to take political advantage. Our problems are the weight of growing national debt, and continuing deficit. My 5yr old granddaughter, Ffion could work out that increasing public spending is politics of lunacy - except in the minds of the economically illiterate/irresponsible/opportunistic (take your pick). Simple message from me will be "symbolically important, politically disappointing and economically insignificant".