Quote Originally Posted by gogobongopop View Post
I saw somebody say that the additional interest we have to pay because of this downgrade now outweighs the cost of EU membership. That's not true, right? (I'm very ignorant about credit ratings) If it is true, given the other tweet I posted a few posts up (about us being down £300 a week rather than "up" "£350"), that would be pretty, well, shit.

That's nonsense though, right?
Pretty much nonsense yes.

Thanks to the profligacy of past governments (G. Brown I'm looking at you) we spend more per annum on interest than we do on the NHS. Even a marginal increase in interest rates can lead to a major increase in debt.

Except that the government has a very long spread on its loans meaning very few mature and need renewing at any one time, it would take about 50 years for an interest rate rise to filter through to all our debt. The immediate impact of any interest rate rise or fall is rather minimal.

Secondly interest rates aren't set by what the ratings agencies set but instead the yield that investors on the bond markets demand.