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Sunday, 21 December 2014

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UK's credit rating cut may benefit Cumbria - claim

Cumbria could benefit from the decision by the credit-rating agency Moody’s to downgrade the UK’s AAA credit-rating to AA1.

John Stevenson  photo
John Stevenson

The announcement on Friday was a blow to Chancellor George Osborne who had put great emphasis on the UK retaining its AAA status.

Economists predict that the downgrade will depress the value of sterling, with some forecasting that the pound could plunge to parity with the euro this year.

That would be a blessing for Cumbria, given the county’s reliance on tourism and export-led manufacturing.

Exporters such as Pirelli in Carlisle and Innovia Films in Wigton stand to benefit because their products will become cheaper in overseas markets, although raw-materials will cost more.

For tourism it is a win-win. Foreign visitors are more likely to come because Cumbria will be cheaper for them, while Brits are more likely to take holidays at home as it becomes increasingly expensive to go abroad.

Carlisle Conservative MP John Stevenson said: “From the tourism point of view it is undoubtedly a benefit and it provides an opportunity for exporters.

“Devaluation is a mixed bag though. Imports become more expensive.

“In the long term it’s important to have a stable pound, so businesses know where they stand.”

Rob Johnston, chief executive of Cumbria Chamber of Commerce, says that Moody’s decision underlines the need for the Chancellor to do more to boost growth in his Budget next month.

Mr Johnston said: “This downgrade by Moody’s isn’t a surprise. While deficit reduction is clearly important, the Chancellor has been wrong in focussing on deficit reduction to the detriment of growth.

“Moody’s has been clear that we’ve lost the AAA rating because of lack of growth in our economy.

“This should demonstrate to the Chancellor that growth is as important as deficit reduction and that he must be braver on measures to stimulate and support growth.”

He added: “Weaker sterling as a result of the downgrade should help exporters but we cannot rely on this alone – particularly given the more complicated currency picture internationally.

“We can’t simply hope for better times. Hope is not a strategy. Urgent measures are needed to get the economy moving.”

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