The narrative: how rating reports explain specific rating decisions in Denmark, Germany, Italy, and the United Kingdom

Abstract

Abstract This chapter analyzes the narratives of rating reports issued for Denmark, Germany, Italy, and the United Kingdom from 1999 onwards. The narratives express consistent disapproval of large entitlement commitments, a neutral or even positive approach toward other types of government spending, and a conflicted approach to taxes. They also emphasize the importance of “monetary flexibility.” With respect to politics, concerns about indecision and instability, confirm the significance of power-sharing and checks and balances. Partisanship, on the other hand, only becomes emphatic in reports when analysts start to perceive pronounced differences between the policy stances of parties. Importantly, none of these variables matter in isolation. Reports reflect on these factors in interaction to make arguments about the degree to which the combination of the prevailing political and policy features and long-term fiscal track record jointly inspire confidence in a country’s long-term commitment to repayment.