Sunday, April 25, 2010

Hung Parliament Won't of Itself Affect UK Financial Position

You've heard the Tory scare stories:

  • A hung parliament will lead to us calling in the IMF
  • A hung parliament will lead to the UK losing its triple A credit rating
  • A hung parliament will lead to financial insecurity
  • A hung parliament leads to Armageddon
Not necessarily so. There are 16 countries with a triple A rating and as the Independent points out 10 of those had coalition governments. Indeed many of the governments that took the toughest action.

Indeed Arnaud Mares, lead UK analyst for Moody's ratings agency, said:

"A hung parliament does not in itself have direct implications for Moody's UK rating. The three main parties broadly agree on the desirability of fiscal consolidation on a scale that, if implemented strictly over the course of the next parliament, would be consistent with the Government maintaining its Moody's AAA rating."

So in the words of David Cameron on Thursday night in the debate "let's end the scaremongering".


Political Dissuasion said...


With the greatest of respect, what nonsense! I am not against us ending up with a hung parliament, but as many benefits as this brings, there are also some downsides and the market's reaction is going to be one of these.

I agree there won't be "meltdown" but you disagreeing that a hung parliament will lead to "financial insecurity" is ludicrous. And by claiming that because other countries have coalitions means it'll be the same here is just simple-step-analysis, only looking at the links that bbenefit your argument and ignoring any other factors.

Of the ten 'coalition countries' you cite, I don't think the markets in the Netherlands, New Zealand, Sweden and Switzerland compare to the UKs market. We are an absolute powerhouse in the world economy. New Zealand and Sweden etc are less reliant on these industries and therefore less affected. If you don't realise that - if the LibDems don't - then that is terrifying naivety.

Germany is the only one of those ten that is comparable but the markets have been used to German coalitions for years and they know it works for German politics and their economy. We simply don't know how British politicians, businessmen, consumers will react and that's what scares the markets leading insecurity.

Yes, Cameron is over-egging the pudding, but under-egging it is just as bad.

Anonymous said...

Thought you might like this piece on Liberal
Defence Policy:


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