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Scandinavia Today / Europe



How it became hard for the British government to "clear the mess that Labour left"

Saturday, 23 February 2013
It finally lost its AAA - rated debt status after a long period of weak economic policy that has made the economy not to grow and could be heading into a triple dip recession. But the Chancellor, Georg Osborne is adamant and vows to stick to current policy even after the downgrade by Moody's, which blamed subdued growth and rising debt burden

One of the main line used by the David Cameron (pictured ) government when his Conservative and Nick Clegg's (deputy PM ) Liberal Democrat party coalition otherwise known as LibCon government came into office some more than three years ago - was "to clear the mess" that former government - the Labour government left.

This meant that they were to pay the massive deficit the Labour government created -  the coalition persistently held the last Labour government for creating the economic crisis that continued in the economy till date. Another mantra of the LibCon government was to make sure that the British AAA rating was to be maintained by all cost.
 ==>David Cameron, img. Granscole
But unfortunately, Britain was stripped of its AAA-rated debt status for the first time ever on Friday night. The chancellor of the exchequer George Osborne, had pledged to use his austerity measures to protect the rating, reports the Gordian newspaper.

The chancellor, who had 12 hours' notice of the decision by Moody's ratings agency, insisted he would stick to his course and had "redoubled" his resolve to tackle Britain's financial problems. However, the downgrading will have major political implications for the coalition, said the Guardian.

The general principle of the LibConn government was fiscal consolidation so they got into the economy like piranha and chopped every area which they felt contained public money and even squeezed more from the private sectors - through things such as higher VAT taxes.
As the fiscal consolidation continued, the Prime Minister, David Cameron was praised for promoting austerity by commentators on various right wing radios and TV as well as papers. Even in the USA, Obama was urged to follow suit.
<== George Osborn img: The Guardian
Now both the US and the UK are downgraded but the main difference is that the UK economy is going into a triple dip recession while the USA is just rocked by political wrangling. There in the USA, their deficit is falling as well as public spending and production is growing.

According to the US - based Business Insider, there's a big confluence of negativity towards the UK right now. Although the UK economy stood at the same level with the USA, its much exposure to the slumping Eurozone, and no domestic energy boom will continue to push the economy down. The country is also heading towards a trade deficit which is widening thanks to a worsening energy balance.
More about the UK loosing its AAA rating from the Guardian
by Team

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