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| UK's loss of AAA credit rating largely symbolic, says Vince Cable | UK's loss of AAA credit rating largely symbolic, says Vince Cable |
| (about 1 hour later) | |
| Vince Cable has said the UK's loss of its AAA credit rating is "largely symbolic" and there are "positive" signs for the economy. | Vince Cable has said the UK's loss of its AAA credit rating is "largely symbolic" and there are "positive" signs for the economy. |
| The business secretary agreed that attempts to reduce the deficit while boosting growth were proving "tricky". | The business secretary agreed that attempts to reduce the deficit while boosting growth were proving "tricky". |
| But he said the measures were "working slowly" and rejected calls for the pace of cuts to be slowed or accelerated. | But he said the measures were "working slowly" and rejected calls for the pace of cuts to be slowed or accelerated. |
| Labour say the downgrade is a "humiliation" for the coalition and ministers must change course. | Labour say the downgrade is a "humiliation" for the coalition and ministers must change course. |
| Ratings agency Moody's cut the UK's top rate to Aa1 on Friday. | Ratings agency Moody's cut the UK's top rate to Aa1 on Friday. |
| The agency, which was the first to downgrade the country's rating since 1978, said expectations were that growth would "remain sluggish" over the next few years and the government's debt reduction programme faced significant "challenges". | The agency, which was the first to downgrade the country's rating since 1978, said expectations were that growth would "remain sluggish" over the next few years and the government's debt reduction programme faced significant "challenges". |
| Asked about the downgrade, Mr Cable likened credit ratings agencies to "tipsters" and part of the "background noise we have to take into account", suggesting they had a "pretty bad record" on economic and corporate forecasting. | Asked about the downgrade, Mr Cable likened credit ratings agencies to "tipsters" and part of the "background noise we have to take into account", suggesting they had a "pretty bad record" on economic and corporate forecasting. |
| He said the US and France had both survived similar cuts to their ratings in the past. | He said the US and France had both survived similar cuts to their ratings in the past. |
| "It is largely symbolic," he told the BBC's Andrew Marr programme. | "It is largely symbolic," he told the BBC's Andrew Marr programme. |
| "In terms of the real economy, there is no reason why the downgrade should have any impact...These things do not necessarily affect the real economy but they do reflect the fact that we are going through a very difficult time." | "In terms of the real economy, there is no reason why the downgrade should have any impact...These things do not necessarily affect the real economy but they do reflect the fact that we are going through a very difficult time." |
| 'Change course' | 'Change course' |
| Mr Cable said efforts to reduce the deficit while also boosting growth were working, but there were "a lot of pressures in the opposition direction" which meant it was taking longer than anticipated. | Mr Cable said efforts to reduce the deficit while also boosting growth were working, but there were "a lot of pressures in the opposition direction" which meant it was taking longer than anticipated. |
| The government would maintain its current course, he added, rejecting calls for more far-reaching cuts as "utterly counter-productive" and labelling calls for a Plan B in which the deficit reduction plan was substantially slowed as "pretty juvenile". | The government would maintain its current course, he added, rejecting calls for more far-reaching cuts as "utterly counter-productive" and labelling calls for a Plan B in which the deficit reduction plan was substantially slowed as "pretty juvenile". |
| "There are some positive things happening," he said, adding that employment and export growth were rising as was the rate of business start-ups. | "There are some positive things happening," he said, adding that employment and export growth were rising as was the rate of business start-ups. |
| Tory MP Kwasi Kwarteng said that without real growth in the economy, it was clear that the rating would come "under pressure". | Tory MP Kwasi Kwarteng said that without real growth in the economy, it was clear that the rating would come "under pressure". |
| But, amid suggestions that sterling could be heavily sold when financial markets open on Monday, he warned against a "kneejerk reaction" and that the downgrade should be "priced into" foreign exchange calculations. | But, amid suggestions that sterling could be heavily sold when financial markets open on Monday, he warned against a "kneejerk reaction" and that the downgrade should be "priced into" foreign exchange calculations. |
| Mr Kwarteng told the BBC that he would like to see more done to generate growth, including further cuts to corporation tax, but the government had "generally the right approach" on the economy and Mr Osborne should stay as chancellor. | Mr Kwarteng told the BBC that he would like to see more done to generate growth, including further cuts to corporation tax, but the government had "generally the right approach" on the economy and Mr Osborne should stay as chancellor. |
| But Labour's deputy leader Harriet Harman said people's living standards would continue to be squeezed and the deficit would continue to rise until Mr Osborne changed direction and increased investment on job creation, infrastructure and industry. | But Labour's deputy leader Harriet Harman said people's living standards would continue to be squeezed and the deficit would continue to rise until Mr Osborne changed direction and increased investment on job creation, infrastructure and industry. |
| "We recognise the reason why the deficit is not going down is because the economy is not growing," she told the Andrew Marr programme. "How many more signs does he (George Osborne) need before he realises their economic plan is failing and is making things worse and he needs to change course." | |
| The UK is at risk of slipping back into recession for the third time since 2008. | The UK is at risk of slipping back into recession for the third time since 2008. |
| It grew in the third quarter of last year, boosted by the impact of the Olympics, but shrunk again by 0.3% in the last three months of 2012. | It grew in the third quarter of last year, boosted by the impact of the Olympics, but shrunk again by 0.3% in the last three months of 2012. |
| All three major credit agencies last year put the UK on "negative outlook", meaning they could downgrade its rating if performance deteriorates. | All three major credit agencies last year put the UK on "negative outlook", meaning they could downgrade its rating if performance deteriorates. |
| Germany and Canada are the only major economies to currently have a top AAA rating, as much of the world has been shaken by the financial crisis of 2008 and its subsequent debt crises. | Germany and Canada are the only major economies to currently have a top AAA rating, as much of the world has been shaken by the financial crisis of 2008 and its subsequent debt crises. |