These come from RBS FX strategist Paul Robson, who is none too happy that the Great British Krona (aka sterling) is not benefiting from the eurozone turmoil.
As he writes (emphasis ours):
It’s frustrating to see GBP not fully participating in EUR weakness. This is largely due to investors worrying that the UK could get into the same sticky mess as the Euro area periphery. This is the WRONG way to look at things. Greece makes it MORE likely that the UK government (of ANY political make up) tackles the budget deficit. If Greece had got off lightly, UK politicians would have been inclined to only superficially tackle the deficit. The fact that it hasn’t means that the UK can’t risk disappointing the market. Inaction isn’t an option. The general public can also see what happens when you risk your sovereign rating because of fiscal negligence.
And here are the ten other reasons why Britain isn’t the next Hellenic Republic:
1.) – There won’t be any nasty revisions to UK budget data.
2.) – The UK owns the printing presses.
3.) – The UK has its own currency to help the adjustment process, export order books are lengthening.
4.) – The UK can make decisions much more quickly and doesn’t have to rely on agreement from the EU, ECB, IMF and Germany.
5.) – The UK doesn’t have to rely on the generosity of others.
6.) – The UK financial system is getting stronger (read: higher future receipts from privatisation), not weaker as is the case in Greece.
7.) – The UK economy is recovering.
8.) – Demand for Gilts remains strong and investors are already underweight.
9.) – There will be (far more) confidence that the UK will deliver on its pledges.
10.) -Interest rates are appropriate for the UK, not the average of the Euro area.
Feeling bullish yet?
Related links:
Britain’s very own AA-rating rumours – FT Alphaville
Testing the AAA boundaries – FT Alphaville
A short-guide to the UK’s triple-A rating – FT Alphaville