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Vince Cable says credit rating loss is ‘background noise’

File photo dated 19/9/11 of Secretary of State for Business Dr Vince Cable who dismissed the loss of Britain's prized AAA credit rating as

File photo dated 19/9/11 of Secretary of State for Business Dr Vince Cable who dismissed the loss of Britain's prized AAA credit rating as "background noise" today. PRESS ASSOCIATION Photo. Issue date: Sunday February 24, 2013. See PA story ECONOMY Credit. Photo credit should read: Rui Vieira/PA Wire

Vince Cable dismissed the loss of Britain’s prized AAA credit rating as “background noise” today.

The Business Secretary admitted that Chancellor George Osborne had been eager to maintain the top level, but said the reduction to AA1 was “largely symbolic”.

Explaining its decision on Friday, ratings agency Moody’s pointed to “subdued” growth prospects and a “high and rising debt burden” weighing on the economy.

It now expects the “period of sluggish growth” to “extend into the second half of the decade”.

Labour branded the move a “humiliating blow” for Mr Osborne and called for higher spending to boost the economy, while there were renewed demands from the political right for tougher curbs on budgets and tax cuts.

However, the Chancellor has vowed to press ahead with his economic strategy, insisting there was no sensible alternative.

Speaking on the BBC’s Andrew Marr Show this morning, Mr Cable rejected the idea of slashing spending further.

But he hinted that investing more in infrastructure, skills and science could help boost the economy.

Asked about the impact of the rating reduction, Mr Cable said: “It is largely symbolic.

“In terms of the real economy there is no reason why the downgrade should have any impact.

“If you remember last year the US was downgraded, the economy grew strongly relative to Europe... and France had a downgrade last year, its interest rates that it borrows long term in the markets are only a little above ours.

“These things do not necessarily affect the real economy but they reflect the fact that we are going through a very difficult time and we are trying to balance the need to get the deficit and the budget under control with the need to get back to economic growth.”

Mr Cable went on: “The rating agencies have a pretty bad record. They are a bit like tipsters. They get some things right and a lot of things not right.

“They are part of the background noise we have to take into account.”

 

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