Herr Oettinger seems a bit confused

Herr Oettinger doesn’t have any input into what the British credit rating is. The European Union doesn’t, nor even the European Commission or the European Central Bank. Any and all of them can refuse to deal with Britain, the British Government, and of course we all desire that they do. But a credit rating is not something determined by a government in the slightest. It’s a market response.

Tim Worstall

Updated: 31st July 2019 — 10:57 pm


  1. Are we to understand that the Emperor has NO clothes?
    That the shamans do NOT control the weather?
    That Manufacturer’s Suggested Retail Price is NOT…the value?

  2. “They work out how likely they think it is that a government will repay those who lend money to it.”
    That’s preposterous. They determine the likelihood of the amount of vigorish that can be extracted over time, the risk of attempted theft by “default”, and the likelihood of the need to pay bruisers to break an arm or two.
    “Credit” rating? Yeah, sure, if THAT’S what you want to call it.

  3. I think this part is important:

    “Being nice to the EU isn’t a part of it. Not paying the EU isn’t a part of it either – one good reason being that we’ve not issued any bonds to them nor taken out any loans from them.”

    Because otherwise one could be forgiven for thinking not paying the 39bn would affect credit rating.

  4. “He [Herr Oettinger} told German newspaper Tagesspiegel: “If he is serious with these statements, it would jeopardise the credit rating of the UK.”

    That does not read like a threat, more like a prediction. And it is certainly possible that some investors might decide to avoid UK bonds if there is a major dust-up over the UK Government refusing to pay what other governments claim is an obligation. Bond holders want to be sure they will ultimately get their money back!

    If enough investors decide to sell/not buy UK bonds, then it could have an impact on the interest rate the UK Gov has to offer. Any effect on UK Gov credit rating would be a secondary impact, and not particularly important — as Tim W points out, credit ratings are free. (And worth every penny, astute investors have long known).

    The reality is that the UK following separation from the EU will not be free as a bird; the UK will still be heavily interdependent on other European countries. That is why, post-separation, the UK needs a thoroughly revamped governance structure that can address living in the real world.

  5. There is one problem with the 39Bn “owed” as a “divorce” settlement to the U – there is no legal basis for their claim. It was a sweetener from the UK during negotiations. Since the UK got the square root of nothing from the EU in the way of concessions etc. and as was repeatedly stated by the EU “nothing is agreed until everything is agreed”, the UK similarly owes the square root of nothing.

    Look at this document compiled by a group of Lawyers:


    Similarly, Civitas has analysed the situation and their report is here:


    So if Britain refuses to pay the blackmail to the EU, they can go whistle as far as affecting the credit rating of the UK because THE MONEY WAS NEVER LEGALLY OWED in the fist place.

    Let us once and for all bury any mention of “the Divorce Bill” and ban any reference to owing them anything. Indeed, considering the UK contribution to the EU Central Bank, they owe the UK, not the other way around.

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