AAAnother bad week for the economy

Hold on to your seats and keep your arms and legs inside the vehicle, investment fans: it looks as though the economy might be destined for another dramatic tumble if predictions by credit rating agency Standard & Poors are anything to go by, and as usual, businesses look set to be the first casualties.

If you thought AAA was just a type of battery, start concentrating now: the agency, one of the US Securities and Exchange Commission’s (SEC) Nationally Recognised Statistical Rating Organisations (NRSRO), has decided to put Britain’s credit rating on to outlook negative. Which, to coin another acronym, is Very, Very Serious (VVS).

The UK has enjoyed an AAA rating (the top tier, denoting ‘the best quality borrowers, reliable and stable’, according to Wikipedia) since the ratings system began back in 1978. But after the International Monetary Fund (IMF) warned the Treasury it needs to lower national debt faster than the Chancellor promised during the Budget, Standard & Poors stepped up to put the UK’s status under question.

Officially, it means the Treasury has 24 months to dramatically reduce the amount it is borrowing or face being downgraded to AA status which, according to Telegraph economics editor Edmund Conway, would ‘automatically trigger an exodus of investment from the country’ – bad news for businesses already struggling to keep their heads above water in a tide of investment which is receding quicker than ever before.

Six months ago, small businesses were on the tip of every politician’s tongue, with everyone from Gordon Brown to David Cameron’s mum proposing new and interesting ways of saving them. In the heat of the moment, though, it seems businesses are the ones which have been forgotten. It’s up to politicians to save them before it's too late.
 

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