• The post you are reporting:
   
  For a long time Labour spokesmen, most specifically Ed Balls, has been citing the USA as an example of who we should emulate and not cut the UK deficit.
  
  Chickens are coming home to roost in the USA now and shows what would be happening to the UK if we had followed Balls lead.
  
  S&P have downgraded their long-term rating for the USA from stable to negative saying there is a one-in-three chance of a downgrade within two years.
  
  It has been prompted by the lack of a clear strategy to deal with the country's ballooning debt problem, so they said.
  
  S&P said: 'We believe there is a material risk that US policymakers might not reach an agreement on how to address medium- and long-term budgetary challenges by 2013; if an agreement is not reached and meaningful implementation is not begun by then, this would in our view render the US fiscal profile meaningfully weaker than that of peer 'AAA' sovereigns.'
  
  S&P said that in 2003-2008, the US's government deficit fluctuated between 2% and 5% of GDP. While this was already noticeably larger than that of most 'AAA' rated sovereigns, it ballooned to more than 11% in 2009 and has yet to recover.
  
  The US Congress is forcing a package of cuts onto the Obama administration but this clearly shows that this is too little too late. The lack of enthusiasm for the cuts by Obama is throwing a question mark over their resolve.
  
  Compare this to strengthened position of the UK in the bond markets thank to the early actions of the Conservative government.
  
  Why does this matter?
  It impacts on interest rates. Higher interest rates will damage any recovery and this is what happens when your rating gets reviewed downwards.
  
  Stockmarkets in the USA and Europe have reacted with large falls today as a result of this. It follows a weakening of Ireland's rating as well.

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