The EU’s Herr Oettinger Doesn’t Understand How Credit Ratings Work


The aim of the European Union project is that all those know nothing politicians get brushed aside and replaced with the sort of technocrats who really know how to do things. This would be a rather more effective plan if we had any evidence that the technocrats had a clue. Something which Herr Oettinger is failing to provide here:

EU Budget Commissioner Günther Oettinger fired the warning after Prime Minister Boris Johnson repeated his threat to withhold the huge sum in the event of a no-deal Brexit. He told German newspaper Tagesspiegel: “If he is serious with these statements, it would jeopardise the credit rating of the UK.”

Herr Oettinger doesn’t have any input into what the British credit rating is. The European Union doesn’t, nor even the European Commission or the European Central Bank. Any and all of them can refuse to deal with Britain, the British Government, and of course we all desire that they do. But a credit rating is not something determined by a government in the slightest. It’s a market response.

More specifically, sovereign ratings are provided – for free, no one pays for them – by the ratings agencies. While there are hundreds of those the three that count are Moody’s, S&P and Fitch. They work out how likely they think it is that a government will repay those who lend money to it.

And that’s it.

Being nice to the EU isn’t a part of it. Not paying the EU isn’t a part of it either – one good reason being that we’ve not issued any bonds to them nor taken out any loans from them. Pissing off Herr Oettinger isn’t included, not even just for the giggles of it.

True, being ruled by efficient German technocrats isn’t to be desired either but by incompetents – well, we did actually have good reason to leave, didn’t we?

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