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Britain's “safe as houses” credit rating was under threat again today after a grave warning that the UK is the major economy most at risk of going bust.
Fitch Ratings said Britian was in danger because it needs “the largest budget adjustment” among those countries with the gold-plated AAA rating.
It came as disappointing figures showed the UK's trade deficit with rest of the world deteriorated sharply in September as imports — of cars in particular — soared.
The double-whammy of bad news sent the pound tumbling.
David Riley, head of global sovereign ratings at Fitch, said Britain's credit rating has not been downgraded yet because of hopes of “a stronger fiscal consolidation programme next year”. The Government plans to borrow a record £175 billion this year but is under mounting pressure to slash the ballooning level of debt.
Expulsion from the elite club of the world's most financially stable countries would be a huge embarrassment for Britain and send borrowing costs soaring.
Official figures today showed that the UK trade gap increased from £6.1 billion in August to £7.2 billion in September as imports outstripped exports despite the weakness of the pound.
Imports were up 7.5% as motorists tempted by the scrappage scheme bought foreign cars. Exports increased by 3.9%.
Alan Clarke of BNP Paribas said: “It's very disappointing. This is one area we were hoping would help to drive us out of recession.”
Reader views (12)
175 Billion loan will just about pay for the "Foreign Aid" to "Third World Countries", and the rest will go to supporting all those thousands of immigrants you and your Nu-Liebour mates let into Britain!!! Well done Clueless Brown we can count on you to save Britain from economic meltdown!!!!
- Alan Wilby, Perth, 11/11/2009 09:29
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Glad my taxes could be of service, once again.
This outcome was predictable - just look at the number of new sports/Chelsea play in the city(!)/foreign gas-guzzlers on the road.
Of course, a massive drop in mortgage interest rates not only help the housing casino "recovery", but enable the lucky recipients to afford extra cash for the imported "grand deluxe" offroader, the one with the electric vanity mirror and hair care appliance socket!
There’s one set of old pollution generators that definitely need scrapping - and I’d gladly pay a few (more) quid towards that event if they called an election NOW and were all marched off to the crusher!
- Darius, London UK, 11/11/2009 08:28
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We supposedly have according to Brown only a small amount of time to stop global warming. He introduces a scheme to sell more cars. The man is absolutely deranged.
- Frederick, London, 11/11/2009 07:58
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Well done folks have you just woken-up to the way Trotsky-Marxist rules are applied to sleepy "Oh no it could never happen here" stand alone states.
If you had been paying attention you could hear Ken Livingstone bragging how he's turned London into a socialist state within a state and these horrors will continue until the people of Britain stand up and say NO.
Mass unfettered immigration along with social housing and state welfare, politicising the police, promoting homosexual acts and single life style denouncing the church and hetrosexual marriage are all part of the destruction of our way of life. Free-loaders pouring in to the country all on welfare to vote Labour is misfeasance public office and politicians that followed those rules could get life in prison, high Treason awaits the rest of them. Wake-up and take action now folks because its never to late!
- Mike, London, 10/11/2009 20:26
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If we sacked all the members of the useless quangos we would nearly be back in the black. As it is, we are heading towards a very nasty black hole. Labour never has worked and it never will!!!!!
- Richard Bowden, Harefield Middlesex, 10/11/2009 18:05
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Despite these figures, which clearly indicate a need for the Government to stop racking up debts, the Health Secretary today announced unfunded proposals to extend private treatment to NHS patients in certain circumstances. We can only pay for this by more borrowing. The Government may have gone mad collectively, or share a complete imcoompetence, but the reason that makes sense is Brown's desperate attempts to secure a legacy. The failure to grasp the nettle on public spending worries me more than anything else. Our children's future, and their children's, are being put in hock.
- James Elliott, Eastborne UK, 10/11/2009 17:16
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It really dosent surprise me, it was coming but no one i told believed me.
So there you have it folks.
Its now a battle for survival.
- Martin, sheffield, 10/11/2009 17:06
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Don't worry, as I'm sure Keith Price from luton will shortly point out, his revered Gordon Brown is absolutely certain that "the UK is better prepared than any other leading Western economy to cope with the recession". Furthermore, Gordon is going to do "everything he can" to ensure that we get through the recession e.g. cut VAT to 15% and introduce the car scrappage scheme. No worries then!!!!
- Malcolm, London, 10/11/2009 16:48
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The scrappage scheme was always going to be a smoke and mirrors job-because the vast majority of the new cars bought would be foreign-yes-we have no home grown car companies bar Morgan, Caterham, LTI Taxis, and such. All it has achieved is to worsen the balance of payments crisis. And, I always thought the scheme offensive environmentally as it is inherently unsound practice to throw away perfectly good used cars with life in them. 'Another fine mess, Gordon.'
- Jon Kent, Hertford. UK, 10/11/2009 15:35
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This is the absolute Number One priority for the government as any downgrade in the UK's rating will result in seriously higher borrowing costs for the UK and compound our pain. It will also see us relegated from the club of top world economies, with all that means for investment etc. One thing in its favour is that it would provide a fitting end to 13 years of Labour government. The previous Labour government ended with the UK begging the IMF for a bail-out loan in the manner of a Mozambique or a Bangladesh. This one will end with the Uk being downgraded as a creditworthy economy. Well done Labour - you really are the class dunces when it comes to economics aren't you (those that cite the Tories and the EMR debacle in 1992 in response should remember that a) Labour wholeheartedly supported going into the EMR and b) the Tories were very much split on the decision - with Thatcher bounced into it by Chancellor Major. "You can't buck the market" was Thatcher's line on it - how right you were Maggie, how right your were).
- Milton-Not-Keynes, London, 10/11/2009 15:08
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The reason we will go bump (aafter Ireland) is the low pound, everything from French wine to toys now costs us 30% more, and most of the cars we buy are foriegn, if we had any sence instead of bringing in the scrappage sceme which could be put against any imported car, we should have put a 12 months relaxation on business rates which the UK manufactures have to pay. This would really make our manufactures feel they are supported, and ensure taht our cars were cheaper.
- Jim Alan, Lake District., 10/11/2009 13:29
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Well done Mr Brown. The car scrappage scheme basically send 2,000 quid abroad.
- Artfuldodger128, London, 10/11/2009 13:24
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