Following the United States and France, Britain became the third major developed economy to have its sovereign credit rating downgraded by Moody's. The other credit rating agencies are expected to follow suit.

Other than a blow to the nation's ego, the downgrade seems more symbolic than anything else. Despite being knocked down a notch from the top AAA rating, the US has hardly had any problem borrowing funds below real interest rates and there is no shortage of eager takers of its long-term government fixed interest securities.

Nobody seriously expects Britain's borrowing cost to go up significantly after the downgrade. British Chancellor George Osborne has remained defiant, vowing to "redouble" the government resolve to deliver its austerity economic plan, which calls for, among other things, cutting the deficit by a quarter.