Politics 25 February 2013 Markets react to UK downgrade by doing basically nothing *Yawn*. Print HTML 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". › The Lib Dem grass roots deserved better from the leadership 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. Subscribe More Related articles Cabinet audit: what does the appointment of Liam Fox as International Trade Secretary mean for policy? No economy is an island: why Britain's finances now depend on Europe Cabinet audit: what does the appointment of Philip Hammond as Chancellor mean for policy?