How the UK can retain its Triple AAA status?

English: East entrance of HM Treasury Français...

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English: George Osborne MP, pictured speaking ...
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…………………My top blog last week was entitled “Why the UK Still Has Triple AAA Status?”

In case other countries are thinking of trying to copy the UK, unfortunately that was about yesterday’s news. George Osborne was genuinely ahead of the curve on austerity and together with strong leadership from the Bank of England, the UK was able to look the credit analysts and hedge fund managers in the eye and remain Triple AAA.

Unfortunately, 2012 is a very different political and economic landscape and the political indecision in Europe has precipitated a very dangerous situation. Every self-respecting economist is screaming against more short-term austerity.

So what needs to be done? Well, in my book, it’s quite simple, so here’s my two cents worth of advice to George Osborne:

  1. To focus on growth with enormous short-term stimulus for investment both at the personal, corporate and public sector levels, and
  2. Debt levels need to be addressed as a serious medium term priority but the top priority is to stimulate short-term growth – austerity is now understood and needs to be subordinated as a priority – everybody now understands the German approach to fiscal prudence, and, of course,
  3. The Bank of England needs to be ready to prime the pumps with more QE (quantitative easing)

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