The obvious fragility of British credit

Theodore Dalrymple, City Journal

Though most of the money paid the wages of a growing number of government workers, Blair repeatedly referred to the spending increases as “investments.” So did Gordon Brown, his chief economics minister. Blair felt it unnecessary to provide evidence that this spending brought actual benefit, economic or otherwise, or to consider its possible costs. He spoke as if the money came from a generous extraterrestrial donor and not from higher taxes and government borrowing. A country with a government that cannot tell the difference between investment and expenditure is one from which lenders would best steer clear.

If the incompetence of the credit-rating agencies needed further proof, Moody’s recent downgrading of Britain would have provided it. It was not the downgrading that showed Moody’s incompetence, however; it was the high ranking that it had accorded Britain in the first place. Britain has been a bad long-term bet for years now. Anyone with the slightest instinct for economic affairs would long ago have foreseen the country’s poor outlook.