Are George Osborne's days numbered as Chancellor?
Filed under: News
The economic policy of the Coalition has entered yet another phase of 'ominshambles' and its attempt to hide its failing Plan A of austerity driven cuts by concocting Plan B rhetoric such as the rail investment programme, does not seem to be convincing the voters.
How the rich get richer
Reports that the UK is 50% likely to lose its AAA credit rating in the near future has applied even more pressure on the Chancellor, as well as the possibility of a "night of the long knives" where he is replaced by a fellow Cabinet member. However, would the UK really suffer if the country were stripped of its triple A status?
How the rich get richer
Carl Emmerson, deputy director of the Institute for Fiscal Studies (IFS), told AOL Money: "A change in the actual rating might not have that much impact economically...For example it is not the case that all triple A-rated countries face the same interest rate."
The US is coming up to its first anniversary as a downgraded nation, after Standard & Poor's placed it at AA+ last August, but the predicted meltdown has never materialised. In fact the doom-mongers who claimed mortgage rates would rise and interest rates soaring long-term, have watched mortgage rates fall to record lows and government borrowing costs easing. Obamanomics (namely borrowing and investing more) has seen government costs begin to ease and the dollar's value up, and global investors are flocking back to US Treasury debt.
Steve Bell, a former Republican staff director for the Senate Budget Committee, was quoted by Bloomberg as saying: "You cried wolf, and no wolf appeared. It has persuaded a fair number of members of Congress that the effect of a downgrade is overstated and it will not lead to some serious economic or financial problem."
What the rating agencies are being accused of is making judgments based on passing fashions and forget to take notice of the realities on the ground, says Roberts.
"You can look at national GDP growth and all matter of financial and economic indicators but the real assessment should be based on the squeeze of household incomes, unemployment and lower living standards. These are what voters are paying attention too," Roberts adds.
So should Osborne be ousted and Foreign Secretary William Hague, the unlikely elder statesman and extremely popular alternative, be given a chance? He has the gravitas to appeal to the electorate and with his recent tours of the Middle East and on the world stage, has earned respect among global leaders. The UK needs to re-establish its international trading credentials, and though it may seem simplistic, an ex-foreign secretary with knowledge of world affairs and global trade would be beneficial to the role.
Roberts goes further: "There is little doubt that George Osborne has a shuddering poor understanding of investment and how to develop infrastructure and responsible capitalism.