Let me say at the outset, I have no respect for the ratings agencies at all. I think they are charlatans and I do not think their opinion matters at all.
However George Osborne does. He has based the case for austerity on the need to retain the triple A rating, and any amount of pain suffered by the population is worth it for that outcome. He has been very clear about that. For example, one year before the election he said that any threat to the rating meant that "britain's economic reputation is on the line".
In the 2010 conservative party manifesto, maintaining the credit rating was put first in a list of "benchmarks" which, they said, could be used to judge the economic success or failure of their government, if elected.
In 2011 Mr Osborne, speaking in the house of commons said
QUOTE
The UK is the only Western country that has seen an improvement in its credit rating in the past 18 months. When this government came to office, the country’s triple A credit rating was on negative watch, which is where it was put by the Labour party. I am delighted that it came off negative watch, but we must stay vigilant. The credit rating agencies have said that an abandonment of our deficit plan would definitely lead to a downgrade of the credit rating.
In 2012, speaking on the radio, Mr Osborne talked about a credit rating warning and he said that this was yet another reminder that there was no other way out of our economic difficulties and that meant he had to continue with his policies of austerity etc
In July the same year Mr Osborne said that the UK's AAA rating was
QUOTE
A reminder that despite the economic problems we face, the world has confidence that we are dealing with them".
Moody's downgraded the rating today. Mr Osborne says that this is proof that he needs to continue doing what he has been doing: only more so.
I wonder what could possibly constitute a reason for changing his mind?
