In the UK, the Credit Downgrade actually important

Why should anyone care about the UK losing AAA rating? Markets largely ignored the country's debt downgrades announced late on February 22, Moody's Investors Service (MCO), and government leaders pooh-poohing it, too. Rating agencies "poor record, they are a bit like the tipsters," says Business Secretary Vince Cable told the BBC. In fact, the cost of borrowing for the U.S. and France have declined since their ratings downgraded in 2011 and 2012, respectively.Politically, though, downgrade a lot of things. "It is a huge political blow to the government, which hopes to establish a narrative for the 2015 election was brought back to the UK from fiscal danger zone and the route back to maintenance," economist Michael Saunders of Citigroup (C ) wrote in a note to clients.The downgrade to a particular embarrassment for the Chancellor of the Exchequer George Osborne, spoken often about the importance of keeping the top ranking. After the announcement of Moody, Osborne said the downgrade suggests that the government should "stick to its course austerity measures' to reduce debt. "The UK has a debt problem, developed over many years, and we have to deal with it," he wrote in a Feb. 24 article for The Sun newspaper in London. The European Commission estimated that the UK debt will reach 98 percent of gross domestic product next year, up from 90 percent in 2012.Still, the downgrade is likely to increase pressure on the government to take measures to promote of growth, as the country stands on the verge of a triple-dip recession. The economy shrank 0.3 percent in the fourth quarter of 2012. In announcing its action, Moody's said it expects sluggish growth in the leader of the opposition Labour Party "extend in the second half of this decade. "Calling downgrade" shameful, "Osborne said they had questions about it in Parliament on Monday. With the government scheduled to present 2013 budget plan on March 20, Labour called for stimulus measures including a reduction in the value-added tax.To anyone who has followed the UK economic woes, the only surprise about Moody's action is that it did not come quickly, says Mark Allan, an economist at Axa Investment Managers in London. But, he said, "it's just the beginning of political pressure." With reporting by Thomas Penny and Scott Hamilton of Bloomberg News