Downing Street Says » Standard and Poor

Asked about the Standard and Poor forecasts, the Prime Minister s Spokesman (PMS) told the assembled press that as the Treasury had been saying, Standard and Poor had reaffirmed the UK s AAA rating, on the basis of what they described as our wealthy diversified economy and high degree of fiscal and monetary flexibility. The Budget set out a clear plan to halve the deficit within five years. That judgement was based on a deliberately cautious view of the public finances.

As the Prime Minister had said in his speech last night, our plans were very similar to those of America, but the worst thing we could do at the moment would be to choke off the possibility of growth, meaning higher debt and higher deficits over the next few years. It was also worth noting that this morning we held our largest gilt auction, which concluded after the announcement from S and P. We were auctioning 5billion of gilts and we had had bids for 13billion.

Asked if it was worth making the point that rating agencies had in the past been partly to blame for some of the sub-prime problems, the PMS replied that he didn t particularly want to get into that today. Moodys reaffirmed our AAA status on the 23rd April, which was after the Budget, so they clearly took a different view from Standard and Poor.

Asked if the Government was confident that it could maintain its AAA rating and were there any measures that the Government would put in place over the next 12 months to address these concerns, the PMS said we were committed to ensuring that our public finances were sustainable in the medium and longer term. That was why, unlike virtually any other government in the world, we had set out a clear path as to how we would ensure our public finances were sustainable with specific future commitments that we were legislating for.

Asked whether the Government thought it was wrong to raise the estimate of how much the bank bail out had come to, the PMS replied that we had given our estimate of the cost of the support to the banking system. Our estimate took into account the significant income expected from fees and recovery from investment. The fees payable for example on the asset protection scheme agreements amounted to some 22billion so these were significant amounts of money.

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» Thursday, May 21, 2009

Standard and Poor

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