The reason we continue to have a AAA rating is because we have a path to a lower debt level. So yes, we could borrow a bit more and invest (and we should). But we still need to cut pensions, spending, and generally do all that fucking over of the little man that people are up in arms about. To keep the AAA rating you need the rating agencies to agree to that path. But it's not a barrier to borrowing more, as long as the path still looks sensible. That's the key argument against austerity. And I'm sorry, but the US doesn't need to worry about 1 agency downgrading it by a single notch. 2 agencies might be a problem. 1 agency by 1 notch would be a disaster for the UK. We are a small economy these days, dwarfed by China, the US and the Eurozone, and soon Brazil, India, etc. It's far easier to move our bond market. If you think the Eurozone's bond market moves at the caprice of investors, I can assure you that ours is even more sensitive. Lastly, the City of London will continue to remain the most important part of the UK economy. It's the UK's largest export industry and its key competitive advantage. After all, you think the UK government could borrow a penny without the City to buy and distribute its bonds?