The financial markets reopened this morning with investors and the government awaiting the reaction to Friday’s announcement from ratings agency Moody’s that Britain had lost its Triple-A rating. A sterling trade-weighted index, tracking the pound against a basket of currencies, dropped around 1% – partly the result of the pound dropping one eurocent against the euro. For the time being, the pound is stable against the dollar, but this is expected to fall slightly over time.

Early days it may be, but the initial response seems to back up Vince Cable’s view that the downgrade was “background noise”, and “largely symbolic”. Indeed, many City analysts have said that the move had already been “priced in” and flagged in advance, with Kit Juckes of Société Générale stating simply that “the risk of a UK default is no higher today than it was a week ago, and remains incredibly low, simply because the pound can act as a shock-absorber”.

The lack of major change simply makes more of a mockery of chancellor George Osborne’s decision to stake so much of his political capital on the preservation of Britain’s top ratings. Economists such as Paul Krugman had long argued that the ratings were fairly irrelevant to the actual fiscal “safeness” of Britain – so why did Osborne consciously and willingly choose to base his credibility on them?

Plus – as Cable has pointed out – ratings agencies frequently make mistakes and are merely the opinions of a few. Why did Osborne allow himself to be held political hostage by such flaky institutions?

His decision has left him in political no-man’s land: by prizing confidence and austerity, he has reduced growth, which has in turn undermined confidence – and if he dismisses the downgrade, he simply makes himself look foolish for having used Britain’s Triple-A rating to justify many decisions he has already made.

Osborne has severely lost credibility, yet has no one to blame but himself.