Oh the irony of markets moving on a ratings action from Standard & Poor’s on the UK. Surely a lesson to be learnt from the credit crunch is that relying on ratings agencies for investment decisions is not the wisest course. Sterling fell, gilt yields rose and the sovereign CDS widened all as a result of S&P placing the UK’s triple A rating on negative.
This decision came on the back of no fresh information. The UK budget was presented in March, at which time it was clear that the deficit would grow rapidly in the coming years.
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