The UK loses its AAA rating but no-one is really surprised other than by the timing. The pound has started to fall already which is no surprise but it will start to raise the cost of the fuel we put in our cars (and for those who use oil to heat their homes) as oil is traded in US dollars. The government will also start to see a change as there will be an increase in the cost of borrowing the government has to make to keep the country going (the bonds we keep hearing about). The changes may not be huge but given the numbers we are talking about they will ultimately make a difference. Given that the UK's debt is currently running at 68% of GDP the interest payments alone are eye-watering and will only get bigger (it wasn't that long ago that a figure of 42% was considered high but the norm!).
More debt to pay back, increased costs of getting loans and the cost of energy rising. These are just three direct impacts of the downgrading from AAA status. Unless drastic measures are taken this won't be the only downgrade. Government debt needs not only to be cut it needs to be got rid of completely - now there's a vision we don't hear politicians talking about much. The power is currently with the financial institutions who the country owes so much money. Think of the situation in China or the Middle East where it's the other way round, where countries are cash rich.
Cut public spending, slash bureaucracy on businesses and encourage exports - it's the only way ahead.
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