Moody’s warned that the AAA rating was at risk if Mr Osborne’s predictions were not met.

Does anybody remember the rhetoric of Mr Cameron and Mr Osborne in the months before last year’s election? Britain was in danger of losing its coveted AAA credit rating under Labour. All this was said despite the fact that, in February 2010, two of the three ratings agencies, Moody’s and Fitch, were both on record as saying Britain’s economic outlook was stable and there was no danger of a downgrade.
This, remember, was when it was assumed Britain’s budget deficit for 2009 had been £178 billion. It later turned out the Treasury had massively overestimated the deficit which was, in fact, £150bn.
This week, Mr Osborne announced in his budget speech the budget deficit for 2010 would be £146.5bn – a figure that would have been lower had the economy not contracted by 0.6% in Q4 2010 having previously grown by 1.7% in the previous two quarters as Labour’s stimulus measures took effect.
He also revised down the Treasury’s growth forecast for the coming two years, although at 1.7% in 2011 and 2.5% in 2012, the predictions are still highly optimistic. This optimism is clearly evident to the markets.
The following day Moody’s warned that the AAA rating was at risk if Mr Osborne’s predictions were not met. As Daily Mail blowhard Richard Littlejohn might say, “you couldn’t make it up”.