Moody’s Has Ranked Debt in the UK as Being of AAA Quality

The well-known and well-respected financial services firm, Moody’s, has given the United Kingdom’s debt an AAA quality rating. This is the highest possible rating given by the Investment Services sector of the financial firm Moody’s. Some of the problems which Moody’s focused on included policy issues regarding spending as well as health care and retirement spending. These costs could topple the high rating given to the UK in the future.

The other countries which made the cut included Germany, France, and the United States. With the United Kingdom, these four countries have been given the highest rating for their debt. This may seem like a good sign, but this high rating will help keep the norm and also attract foreign investment and ownership. For those in the UK, debt is a normal part of life. With most citizens in the UK supporting debt loads of over 15,000 pounds, the idea of a world without debt may be hard to fathom. Leveraging expenditures is a regular part of life and business in the United Kingdom. While the debt in the UK has kept its high rating, this does not mean that holding large amounts of debt is a good idea. This was shown during the housing crisis. Mortgages and debts were defaulted on at record rates, causing the debt in the UK to be much less attractive.

In order to keep this high rating, Moody’s has suggested that the top four countries find a way to keep their debt loads stable in the long-run. This will prove to be increasingly difficult since all of these countries have aging populations without the younger generation and associated tax base to take on the cost. These are large policy issues that must be dealt with. The major concerns are pension expenses and subsidies for health care.

The UK, the US, France, and Germany are the largest countries in the world and having highly rated debt is important to keep their financial systems going. Each country has taken separate steps to try to manage the debt problem, with varying success. US President Obama signed a bill into law in December 2010 worth $858 billion which would extend the Bush tax cuts for another two years. In addition to the tax breaks, this bill also included benefits for those without jobs. Insurance breaks were also introduced. Payroll taxes for those who are employed have been dropped by 2% for 2011. The US actions are quite different than the actions taken by France, Germany, and the United Kingdom. The US has focused on keeping individuals solvent while the UK has introduced several deficit cutting measures designed to bail its own government out of the strangling effects of its national debt.

The coalition government in the United Kingdom has been able to work together quite well in solving the major budgetary concerns. With a primary focus on the budget deficit, the UK government has been able to tackle its problems with liquidity. This will prove to be beneficial to the debt in the UK in the long run, as it will likely continue to hold the highest rating given by Moody’s.