Fitch, one of the Credit Rating Agencies, has declared that the UK is at risk of losing its treasured Triple A (AAA) rating because of our vast budget deficit. This of course has been grasped by George Osborne, the Shadow Chancellor, as evidence that we need to address the national debt. But the UK has never defaulted on its sovereign debt, even through the bad times of 1976 and the IMF. So what makes Fitch think this is possible now?September this year saw the largest budget deficit for any September since 1993 when these records began. But Gordon Brown has assured us that the deficit will be brought under control over the next 4 years.

Do I really believe that the UK will lose its AAA rating? Actually no I don’t. Why would it unless it actually defaulted on its commitments? Also remember that, agencies like Fitch got it all wrong in the first place by rating all those dodgy mortgage securities as investment grade. So you don’t need to trust their pronouncements on anything anyway.

Fitch has acknowledged that nothing will happen immediately, they are looking at the post general election scenario. That sort of puts the ball in Cameron’s court and he, with a few well placed announcements, will placate the rating agencies who will then declare the UK clean.

The UK will be OK as long as we have a ‘business plan’ that meets the requirements. But overall, if we keep up with the Gilt coupon payments and coughing up when the Gilts mature we will be OK.

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