While the move would be an embarrassment for the Cameron government, record-low government bond yields (10-year at 1.63%) are likely to ignore it, if recent history is any guide.
On 14th February this year, Moody’s put the UK’s AAA credit rating on negative outlook. This means that the agency says there is a 30% chance of the UK being downgraded within the next 18 months (i.e. by mid 2013). A month later, Fitch moved the UK’s AAA rating to negative too – for them this means a slightly greater than 50% chance that there is a downgrade within the next two years. At the time Moody’s said that “any further abrupt economic or fiscal deterioration would put into question the government’s ability to place the debt burden on a downward trajectory for fiscal year 2015-16?.
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