Markets react to UK downgrade by doing basically nothing


We've said again and again and again that credit rating agencies have very little economic effect, and Friday's downgrade of Britain from Aaa to Aa1 rating is proving that to be the case yet again.

The UK government's cost of borrowing, as you can see in this chart via Sky's Ed Conway, is already back at the level it was before the downgrade — and actually lower than it was when markets opened on Friday:


Image: Bloomberg

The pound, meanwhile, is stable against the dollar and only slightly down against the Euro. In the context of its yearlong drop, that's a positive:


Image: Thompson Reuters

So long as Cameron and Osborne are prepared to ignore the message the downgrade sends — and let's be clear, despite the economically incoherent reasoning Moody's give, the message is that austerity has failed — the markets will continue to respond with a deafening "meh".

Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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John McDonnell's Mao zinger spectacularly backfires

The shadow chancellor quoted from Mao's Little Red Book in his response to George Osborne's autumn statement.

John McDonnell's response to George Osborne's autumn spending review has quoted from a surprising source: Mao's Little Red Book.

The Little Red Book is the name commonly given to Quotations from Chairman Mao Tse-tung, a book that collected together the - you guessed it - quotations of the former Chairman of the Communist Party of China. It was widely distributed after the cultural revolution during the personality cult of Mao, alongside Lenin's The Three Sources and Three Components of Marxism and Engel's Socialism: Utopian and Scientific. 

In response, George Osborne opened the copy of the book and said "it's his [McDonnell's] personal signed copy".

Aside from chapters on labour, women and the army, the book also collects quotations on topics like "Imperialism and All Reactionaries Are Paper Tigers". Mao's legacy as a political theorist is somewhat contested given the approximately 18 to 45 million people who died during China's "Great Leap Forward", a process of rapid industrialisation instigated by the Communist Party in the late 1950s. The death toll from Mao's cultural cleansing program is hotly debated, but sources generally agree over half a million people died as a direct result.

There has been some suggestion that in terms of "not offering obvious spin opportunities to your opponents", the decision to quote Mao may not have been McDonnell's finest.

I'm a mole, innit.