Bond vigilantes and rating agencies gave a frosty reception to the Budget, warning that Alistair Darling has done little to restore faith in UK finances or safeguard its AAA rating. “Public debt does not fall materially until after 2014-15. This projected path leaves the public finances vulnerable to shocks,” said Brian Coulton from Fitch Ratings, responding to the Budget.
While eurozone states are cutting their deficits to 3pc of GDP within three years, Britain is cutting to 5.2pc over four years. “We don’t see why the UK thinks it has more time than other countries,” he said.
Marc Ostwald at Monument Securities said Labour is scattering money to secure the public sector vote. “We we’re heading for a downgrade because I don’t think this is going to look like a credible plan to rating agencies,” he said.