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Pound falls as Fitch warns of UK's ‘formidable’ debt challenge
by Deborah Hyde on Jun 08, 2010 at 11:31
But the agency warned that achieving that goal through spending cuts alone would imply unprecedented falls in spending.
The comments come just a day after prime minister David Cameron warned the impending cuts will be 'enormous' and will affect everyone.
Today, chancellor George Osborne will tell MPs that all public bodies will be consulted on how spending cuts can be achieved. Osborne is also expected to include a review of the role of government in the five month spending review.
Osborne has said he will take his cue from Canada's 'bloodbath budget' in the 1990s when the government cut public spending by 20% by privatising many government functions and imposing charges for previously free services.
Some suggest that following Canada would mean much more ambitious spending cuts than was signaled in pre-election manifestos.
Mark Littlewood, director general of the Institute of Economic Affairs, said that if the UK were to follow Canada’s lead spending cuts would have to be around double what was forecast in the Conservative Party manifesto:
‘Following their example and cutting public spending by around 20% would mean cutting public spending by about £140bn. This is vastly more ambitious and encouraging than anything promised in the Conservative manifesto,' he said.
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5 comments so far. Why not have your say?
Julian Stevens
Jun 08, 2010 at 11:57
If you voted Labour, what d'you expect?
report thisMichael Fallas
Jun 08, 2010 at 13:56
What took Fitch so long to work that one out I wonder ?
report thisAnthony Rapp
Jun 08, 2010 at 19:28
Not one labour goverment since the last
war has walked away from office leaving
the country's finances in a reasonable
state, on the contrary it has always been a
disaster.
If the the Lib Dems can put up a good show by supporting the Tories through these difficult times then may there will not be a labour party in the future as the Lib Dems become the natural alternative..
report thisChris F
Jun 08, 2010 at 19:32
This agency rated countless mortgage backed securities as equivalent to the best sovereign debt out there - on par with German or US bonds.
They were written off within 2 years.
Now these fools are commenting on the UK economy, which has a real effect on the country.
Why does anybody believe them?
Is there really more chance that UK PLC will default on Gilt payments as Rabobank defaulting on a bond payment?
It's very clever to bleat about Labour and make a political point about this issue, but this is real life and not something to score political points with.
Shame on the credit ratings agencies. Shame on our so called regulators for not banning their pronouncements. Shame on people for talking this country down to make a point about a political party.
report thisFred Taylor
Jun 08, 2010 at 20:11
So much of what i read regarding the UK financial situation is tainted with political motivations.
Where can i find out the truth,and if anyone is genuinely to blame,or if the whole situation has been brought about by us all living way above our means for the last forty years?
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