And John Chambers, who chairs the sovereign debt committee at S&P's, praised France for a "well-designed fiscal policy" – in particular plans to raise the retirement age to cut the country's long-term pension burden. "The government got a lot of pressure from the street, but it didn't cave in to that pressure, and that underscored its credibility," Mr Chambers said.
Nonetheless, on one measure, the cost of insuring government bonds against default, the markets havealready downgraded France – hergovernment bonds are more costlyto insure against wipe-out than those issued by the Malays, Thais, orMexicans.
A minority of analysts are starting to argue that the UK could be vulnerable because of its poor growth prospects. Economists at UBS Bank commented: "The UK's AAA sovereign rating is vulnerable if the economy continues to disappoint on growth and the political response is seen to waver from a stringent fiscal consolidation plan. The key risk here is the impact of the downgrade on US economic growth and any spillover impact on Spain, Italy and France. On the political front, there is reason to be somewhat more comfortable. All in all, the fear in the UK is not so much about errors from policymakers, but rather, on the potency of the tools available to policymakers to address the crisis."
