As UK inflation falls, so does France’s credit rating
In November 2011 the UK Consumer Price Index had inflation at 4.8%, but this fell during December 2011 to 4.2%. Similarly the Retail Prices Index, which is the UK’s inflation figures which also takes into account mortgage payments, also fell, from 5.2% in November 2011 to 4.8% in December 2011. These falls are the highest for over 2 years and signify some hope that inflation could drop to 2% by the end of 2012.
Over the channel France has had its triple A credit rating reduced a notch by Standard and Poors. Austria has also had their triple A credit rating reduced, following major economic powers like Japan and the USA who had their triple A credit ratings reduced last year.
Standard and Poors have sent a shot across the bow of European countries, illustrating that the financial markets do not believe that they are doing enough to balance their finances and they need to start acting now to sort the European financial problems out.
The European Union needs to quickly come up with a plan that will deal with the problems in Greece and also the Italian debt crisis. Most countries in Europe need to make significant cuts in expenditure and need to have in place positive plans to balance budgets. They also all need to improve economic growth and become more competitive.
The UK has retained its triple A credit rating, despite also having large debts. However the ratings agencies have more confidence in the UK because they have plans in place and are taking positive steps to address and deal with its financial problems.
Other countries in Europe suffering will also have negative consequences for the UK, so it is important for all our neighbours to make positive plans so that we can all make a good financial recovery. As the financial economies improve so will our lending institutions’ ability to lend. However, to help growth investment is required so the speed of any growth maybe very much dependant on the lending institutions and how willing there are to lend. Therefore the availability of commercial mortgages and bridging loans may very much determine the speed of our financial recovery.