Moody's downgrade might be symbolic - but it's still correct

What does it mean, if anything?

Moody’s downgrade of Britain’s credit rating, from AAA to AA1, is largely symbolic, akin to a sticking plaster falling off a major unhealed gash. It will have no effect on the cost of borrowing, so what does it mean, if anything?

First, it was an anomaly that America and France had been downgraded months ago, and that little bankrupt Britain could sail on merrily, as if the only boat in the race without a leak, was plainly ludicrous.

Second, the fact is that there is a major hole below the waterline in the nation’s finances that isn’t being fixed. But compare 600,000 new jobs being created in the last year by the private sector, of which half are full-time: either the figures are wrong, or thousands of jobs have been lost at the same time, by bankrupt retailers and lost manufacturing output.

Third, sterling was on the slide in the FX markets before Moody’s even blew their faint-hearted whistle. This was after Mervyn King of the BoE voted for more QE, despite the fact that he is already sitting atop one-third of the national debt, and could easily topple off this pile of irredeemable IOUs.

Fourth, the national debt, which was meant to be coming down, is now going back up again. Osborne’s cuts were too little, and now are seen to be too late. But the Cameroons are such a lot of new-drippy Old Etonians that they are increasingly seen as a generation that hasn’t got the balls to pick up a sharp axe and really wield it. No pain, no gain.

As a result of reasons one to four, number five is that the economy is going nowhere fast except down a big, black hole called the IMF. Sort it Osborne, or quit! The answer is simple: slash government expenditure and taxation on March 20, not in some mealy-mouthed way as you are currently posturing, but in a determined and dramatic way.

Slash the Gordian knot of ever-advancing EU-driven socialist-bureaucracy! Cut the chain that is holding back the UK private sector, the people who have had proper jobs all their lives! Unlike you miserable lot in government, who have never had a proper productive job at all.

After all, the only man in Britain who is going to say you are wrong to do such a thing, is the utterly stupid, pathetic and ludicrous Ed Balls. And he is the one who assiduously dug the nation over many years into this great hole in the first place! But then, I suppose, he has never had a proper job either - a kindred spirit, perhaps?

This first appeared on Spear's.

Photograph: Getty Images

Stephen Hill writes for Spear's

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Could Labour lose the Oldham by-election?

Sources warn defeat is not unthinkable but the party's ground campaign believe they will hold on. 

As shadow cabinet members argue in public over Labour's position on Syria and John McDonnell defends his Mao moment, it has been easy to forget that the party next week faces its first election test since Jeremy Corbyn became leader. On paper, Oldham West and Royton should be a straightforward win. Michael Meacher, whose death last month triggered the by-election, held the seat with a majority of 14,738 just seven months ago. The party opted for an early pre-Christmas poll, giving second-placed Ukip less time to gain momentum, and selected the respected Oldham council leader Jim McMahon as its candidate. 

But in recent weeks Labour sources have become ever more anxious. Shadow cabinet members returning from campaigning report that Corbyn has gone down "very badly" with voters, with his original comments on shoot-to-kill particularly toxic. Most MPs expect the party's majority to lie within the 1,000-2,000 range. But one insider told me that the party's majority would likely fall into the hundreds ("I'd be thrilled with 2,000") and warned that defeat was far from unthinkable. The fear is that low turnout and defections to Ukip could allow the Farageists to sneak a win. MPs are further troubled by the likelihood that the contest will take place on the same day as the Syria vote (Thursday), which will badly divide Labour. 

The party's ground campaign, however, "aren't in panic mode", I'm told, with data showing them on course to hold the seat with a sharply reduced majority. As Tim noted in his recent report from the seat, unlike Heywood and Middleton, where Ukip finished just 617 votes behind Labour in a 2014 by-election, Oldham has a significant Asian population (accounting for 26.5 per cent of the total), which is largely hostile to Ukip and likely to remain loyal to Labour. 

Expectations are now so low that a win alone will be celebrated. But expect Corbyn's opponents to point out that working class Ukip voters were among the groups the Labour leader was supposed to attract. They are likely to credit McMahon with the victory and argue that the party held the seat in spite of Corbyn, rather than because of him. Ukip have sought to turn the contest into a referendum on the Labour leader's patriotism but McMahon replied: "My grandfather served in the army, my father and my partner’s fathers were in the Territorial Army. I raised money to restore my local cenotaph. On 18 December I will be going with pride to London to collect my OBE from the Queen and bring it back to Oldham as a local boy done good. If they want to pick a fight on patriotism, bring it on."  "If we had any other candidate we'd have been in enormous trouble," one shadow minister concluded. 

Of Corbyn, who cancelled a visit to the seat today, one source said: "I don't think Jeremy himself spends any time thinking about it, he doesn't think that electoral outcomes at this stage touch him somehow."  

George Eaton is political editor of the New Statesman.