Osborne humiliated as UK loses AAA credit rating

The Chancellor chose to make Britain's AAA credit rating the ultimate test of economic stability. Tonight, he has been hoist with his own petard.

Back in February 2010, a few months before he entered the Treasury, George Osborne declared: "Our first benchmark is to cut the deficit more quickly to safeguard Britain’s credit rating. I know that we are taking a political gamble to set this up as a measure of success." A gamble it was and how it has backfired on the Chancellor. Tonight, Moody's became the first rating agency to strip the UK of its AAA credit rating (downgrading it to AA1), citing the "continuing weakness" in the UK's growth outlook and its "high and rising debt burden".

For Osborne, who chose to make our credit rating the ultimate metric of economic stability, it is a humiliating moment. Not my words, but his. During one of his rhetorical assaults against Labour in August 2009, he warned: "Britain faces the humiliating possibility of losing its international credit rating". Rarely before or after becoming Chancellor, did Osborne miss an opportunity to remind us just how important he thought the retention of our AAA rating was.  When the UK was first put on negative outlook by Standard & Poor's, he said:

It's now clear that Britain's economic reputation is on the line at the next general election, another reason for bringing the date forward and having that election now ... For the first time since these ratings began in 1978, the outlook for British debt has been downgraded from stable to negative.

After it was later moved off negative outlook, he declared:

Last April, the absence of a credible deficit plan meant our country's credit rating was on negative outlook and our market interest rates were higher than Italy's.

By Osborne's own logic, then, his deficit plan is no longer credible.

Tonight, the Chancellor has, unsurprisingly, described the decision as "a stark reminder of the debt problems facing our country – and the clearest possible warning to anyone who thinks we can run away from dealing with those problems". His cause is aided by the fact that the hawkish rating agencies want more austerity, not less. In its explanation of the decision, Moody's cited "reduced political commitment to fiscal consolidation". As he comes under attack from Labour, Osborne will retort, "but you want to borrow even more!" Ed Miliband and Ed Balls, who frequently shy away from making the explicit case for Keynesian stimulus, will need a clear and strong response.

The economic consequences of the downgrade are unlikely to be significant. France and the US, for instance, have seen no rise in their borrowing costs since losing their AAA ratings (in fact, yields on US and French bonds have fallen). All the evidence we have suggests that the market is prepared to lend to countries that can borrow in their own currencies (such as the UK) and that enjoy the benefits of an independent monetary policy, regardless of their credit ratings or their debt levels. But the politics of the downgrade are toxic for Osborne.

Still, you might ask, why should we listen to Moody's, the agency that gave AIG an AAA rating just a month before it collapsed? The answer is simple: we shouldn't. But this doesn't alter the fact that Osborne did. For political purposes, he used Britain's credit rating as a stick to beat Labour with. He can hardly complain if others now use this move against him. Tonight, the Chancellor has been hoist with his own petard.

Chancellor of the Exchequer George Osborne leaves Number 11 Downing Street on December 12, 2012 in London. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Is there such a thing as responsible betting?

Punters are encouraged to bet responsibly. What a laugh that is. It’s like encouraging drunks to get drunk responsibly, to crash our cars responsibly, murder each other responsibly.

I try not to watch the commercials between matches, or the studio discussions, or anything really, before or after, except for the match itself. And yet there is one person I never manage to escape properly – Ray Winstone. His cracked face, his mesmerising voice, his endlessly repeated spiel follow me across the room as I escape for the lav, the kitchen, the drinks cupboard.

I’m not sure which betting company he is shouting about, there are just so many of them, offering incredible odds and supposedly free bets. In the past six years, since the laws changed, TV betting adverts have increased by 600 per cent, all offering amazingly simple ways to lose money with just one tap on a smartphone.

The one I hate is the ad for BetVictor. The man who has been fronting it, appearing at windows or on roofs, who I assume is Victor, is just so slimy and horrible.

Betting firms are the ultimate football parasites, second in wealth only to kit manufacturers. They have perfected the capitalist’s art of using OPM (Other People’s Money). They’re not directly involved in football – say, in training or managing – yet they make millions off the back of its popularity. Many of the firms are based offshore in Gibraltar.

Football betting is not new. In the Fifties, my job every week at five o’clock was to sit beside my father’s bed, where he lay paralysed with MS, and write down the football results as they were read out on Sports Report. I had not to breathe, make silly remarks or guess the score. By the inflection in the announcer’s voice you could tell if it was an away win.

Earlier in the week I had filled in his Treble Chance on the Littlewoods pools. The “treble” part was because you had three chances: three points if the game you picked was a score draw, two for a goalless draw and one point for a home or away win. You chose eight games and had to reach 24 points, or as near as possible, then you were in the money.

“Not a damn sausage,” my father would say every week, once I’d marked and handed him back his predictions. He never did win a sausage.

Football pools began in the 1920s, the main ones being Littlewoods and Vernons, both based in Liverpool. They gave employment to thousands of bright young women who checked the results and sang in company choirs in their spare time. Each firm spent millions on advertising. In 1935, Littlewoods flew an aeroplane over London with a banner saying: Littlewoods Above All!

Postwar, they blossomed again, taking in £50m a year. The nation stopped at five on a Saturday to hear the scores, whether they were interested in football or not, hoping to get rich. BBC Sports Report began in 1948 with John Webster reading the results. James Alexander Gordon took over in 1974 – a voice soon familiar throughout the land.

These past few decades, football pools have been left behind, old-fashioned, low-tech, replaced by online betting using smartphones. The betting industry has totally rebooted itself. You can bet while the match is still on, trying to predict who will get the next goal, the next corner, the next throw-in. I made the last one up, but in theory you can bet instantly, on anything, at any time.

The soft sell is interesting. With the old football pools, we knew it was a remote flutter, hoping to make some money. Today the ads imply that betting on football somehow enhances the experience, adds to the enjoyment, involves you in the game itself, hence they show lads all together, drinking and laughing and putting on bets.

At the same time, punters are encouraged to do it responsibly. What a laugh that is. It’s like encouraging drunks to get drunk responsibly, to crash our cars responsibly, murder each other responsibly. Responsibly and respect are now two of the most meaningless words in the football language. People have been gambling, in some form, since the beginning, watching two raindrops drip down inside the cave, lying around in Roman bathhouses playing games. All they’ve done is to change the technology. You have to respect that.

Hunter Davies is a journalist, broadcaster and profilic author perhaps best known for writing about the Beatles. He is an ardent Tottenham fan and writes a regular column on football for the New Statesman.

This article first appeared in the 05 February 2015 issue of the New Statesman, Putin's war