º£½ÇÊÓƵ

The only good news from the º£½ÇÊÓƵ's credit downgrade by Moody's is that a lower pound ought to boost export growth and traditionally is good for the equity market.

Especially a FTSE 100 Index earning around 70 per cent of its profits overseas and paying a large chunk of its annual dividends in US dollars.

The downside is unleaded petrol back up to above 140p per litre and inevitably even higher utility bills.

The more cynical commentators might now be tempted to say that the º£½ÇÊÓƵ has neither an economic strategy nor a mandate for the central bank. Austerity-wise, the º£½ÇÊÓƵ has produced no sign of a slowdown in the rate of government spending, drawn a blank on economic growth and failed to maintain our credit rating. But apart from that it’s been a roaring success. Meanwhile the Bank of England has abandoned its mandate to keep inflation within range and replaced this with … err? No, I don’t know either.

What I am much more confident about is that every recipe for growth should include expansion of the money supply. Hence I need to revisit my previous belief that quantitative easing has run its course. We should now view further gilt purchases as more likely than not.

Where I really believe that fiscal policy has confused its elbow with another part of its anatomy (and this applies not just to the º£½ÇÊÓƵ but to broadly the rest of the world too) is that tax cuts are needed to boost growth. What we have instead is tax rises to pay off the previous excess and unproductive government expenditure.

It is fascinating, though, that our economic mismanagement is arguably having no impact on financial markets. Equities are having a mere pause for perspiration in the Great Bull Run and bond yields drift slowly upwards.

Indeed, the most significant event for the º£½ÇÊÓƵ economy this week, in my ever highly personal opinion, was the size of the trade delegation David Cameron took to India, said to be the largest the º£½ÇÊÓƵ has ever sent anywhere in the world. I may be wholly wrong but I believe the Prime Minister has worked out that forging closer ties, commercially and educationally, with India is so much more important than our short term credit rating. And that makes me glad.