Louth MP Sir Peter Tapsell has challenged the view that the loss of Britain’s AAA credit rating has so far been detrimental.
Speaking during Prime Minister’s Questions in the House of Commons on Wednesday, Sir Peter asked: “Has my right hon. Friend noticed that since - in common with the United States and Japan - we lost our triple A status, the cost of our international borrowing has actually fallen?”
Britain lost its ‘triple A’ credit rating on Friday, initially given by ratings agency Moody, after slow economical growth.
In essense the downgrade means Britain is seen on the international markets as being less able to pay back its debts.
David Cameron responded to Sir Peter, he said: “My right hon. Friend makes an important point. While I do not deny for one second the importance of the rating agencies, the most important test of credibility - a test that is faced day in, day out in the markets - is the rate of interest at which people borrow, and the rate of interest at which we borrow is still at record lows.
“It has gone down since the election, whereas it has gone up in many other countries, but if we listened to the Labour party, it would go up again.”
Labour’s shadow chancellor Ed Balls said it was a “‘humiliating blow’ for chancellor George Osborne whose election pledge was the importance of keeping the gold-standard rating.
However, Mr Osborne said: “I think we’ve got a very clear message, a loud and clear message that Britain cannot let up in dealing with its debts, dealing with its problems, cannot let up in making sure that Britain can pay its way in the world.”