UK Economy Making Steady Progress

07:28 Thursday 6th December 2012
Bigger Breakfast Show
BBC Radio Cambridgeshire

PAUL STAINTON: Gerald says, “electricity up, gas up, telephone up, water rates up, council tax up, petrol up, food bill up, taxes up. The rich get richer, the poor get poorer, the only growth industry is unemployment. If it doesn’t affect you now, just give it a little more time. It soon will.” Well Tony Bonsignore from our Business Unit was all over that yesterday, weren’t you, the Autumn Statement. And it’s not only going to affect our tax and our petrol and everything else. It might affect our triple-A rating, mightn’t it Tony?
TONY BONSIGNORE: Hi there Paul. Yes it might affect our triple-A rating. Certainly one of the ratings agencies Fitch, which has already said it’s not convinced we deserve our triple-A rating, well last night it issued another statement. It went through the numbers yesterday and said that triple-A rating is now seriously seriously under threat. And the reason is because of that announcement by George Osborne that he’s going to miss his own debt target. The Government said back in 2010 when it was elected , this Coalition Government, that it would effectively get .. start to tackle the debt mountain and get rid of the cyclical debt, that’s the bit that doesn’t go up and down with the recession. They said they were going to get rid of that by 2015. And he admitted yesterday that it wouldn’t be until 2017 at the earliest. So that triple-A rating, it’s a financial and potentially a political blow there. It might mean we have to borrow .. we might have to pay more, rather, to borrow on financial markets. And the Government has made such a big deal about triple-A, that I think to lose it would be a political disaster.
PAUL STAINTON: What did the City make of his statement yesterday? Because a lot of smoke and mirrors in there as well, wasn’t there? He’s already included, is it something like three and a half billion from the sale of some phone networks, which he hasn’t even sold yet. And other things have been slipped in as well, haven’t they?
TONY BONSIGNORE: Yes. There was a lot of smoke and mirrors. I think that’s a good way to describe it. For example, that three and a half billion is from the 4G auction, when we get the 4G broadband.
PAUL STAINTON: Which hasn’t happened yet.
TONY BONSIGNORE: It hasn’t happened. He’s assuming it’s going to come. There was also some interesting accounting, shall we say, from quantitative easing as well, taking some of the profits on that and taking them from the Bank of England and giving them to the Treasury to flatter the numbers. Those numbers were not good. I think most economists, most people in the city, can see through that. And they can see that things have got a lot lot worse, and they’re not getting better any time soon. That said Paul, business liked it. Cutting corporation tax, more spending on hospitals, roads and schools, more capital allowances, there was stuff for them to like. They reckon that they can get something out of this. And the Chancellor needs it. He needs business to get us out of this mess.
PAUL STAINTON: Well we shall see how it plays out over the next few days.