Moody Blues for the Chancellor

John Van Reenen examines the economic and political implications of Moody’s stripping the UK of its AAA credit rating last Friday. While the move may have little direct economic significance, it is nonetheless totemic, reflecting deeper structural problems in the UK economy. It is also politically damaging for a Chancellor who staked his reputation on preserving the AAA rating. Much now hinges on the decisions made in next month’s budget, both for the UK’s economic vitality and for George Osborne’s own political future.