Also Venezuela is a sovereign nation with its own currency. We live in a globalized world where those things do matter. The best you can achieve by isolationism is North Korea.
Maybe slow down a bit before claiming that someone does not have a clue. The Venezuelan bolivar is not really pegged to any currency otherwise its hyperinflation would not have been possible. That is also the reason why nobody would buy bonds in the Venezuelan bolivar.
Of course the UK is in a different situation than Venezuela, being a country with an advanced economy.
Still the rating will have an effect as a lot of institutional investors are bound to very stable bonds. So the interest rates will rise.
Of course the UK can use inflation of the sterling to get rid of its debt. That would however also reduce its ability to issue low yield debt in the future.
In the end the UK is bound to what rating agencies and the market thinks of it like basically any other country.
I don't need to slow down. You've nicely proved it.
"The Venezuelan bolivar is not really pegged to any currency"
It is. There is an official VEF to USD exchange rate. Which means if you get some VEF on the black market you can upgrade it to USD and make a profit. That's the problem.
"So the interest rates will rise."
There is no mechanism by which interest rates can rise unless the government sector permits it. Look at the Weekly tenders for Treasury Bills in the UK. By simply mentioning that the UK would use the Ways and Means Account rises in Treasury Bill rates stopped and reversed and are now negative
Sterling can't go anywhere else - because it doesn't have the feedback loop that kills Venezuela, Argentina and even Zimbabwe, yet again.
30 years of Japan, 10 years of QE elsewhere, and the simple announcement of an account that didn't even get used are the evidence. Sovereign currency markets are supplicants not masters. They get what they are given.
Perhaps time to update your understanding of how monetary operations actually work in reality.
Government bonds are still bound to the market setting rates. Why else would e.g. Germany have lower yield than the UK? And Germany doesn’t even have its own currency.
