THE chairman of the Manx Business Connection has spoken out about the fact the Island's sovereign rating has been downgraded from AAA to AA+.
John Webster has said he doesn't think the rating drop by Standard and Poor's will affect the attractiveness of the Island to investors.
Sharing his thoughts on the matter Mr Webster said: "There are a number of questions to be addressed following the downgrade by S&P of the Isle of Man's rating from AAA 'exceptionally strong capacity to meet financial obligations' to AA+ 'very strong capacity to meet financial obligations'.
"First - does the downgrade actually have a direct financial impact upon the Isle of Man Treasury?
"No - the Isle of Man Government always runs a surplus so has no borrowings.
"Countries such as Italy have large borrowings that are significantly affected by ratings downgrades which lead to increases in the amount of interest on their loans and the well-documented consequences.
"Second - will the downgrade reduce the attractiveness of the Island to investors or business people wishing to develop their business here?
"No - in my view there will be very little impact on business as decisions on when and where to locate are based on a package of factors which have a direct impact on companies' ability to trade profitably.
"These factors include the quality of infrastructure, expertise, reputation, labour supply, rule of law, etc. Investors wishing to place funds in the Island are unlikely to be deterred by the downgrade as the Isle of Man's financial standing and future prospects remain extremely good.
"Third - are the rating agencies invariably reliable and accurate?
"No - arguably the sub-prime mortgage crisis was caused by the failure of the agencies to deal with smart bond sales people who encouraged the agencies to give AAA ratings to bundles of worthless home mortgages. Examination of the mortgages included in the AAA ratings, many of which could never conceivably be repaid, throws a long shadow on the integrity and competence of the financial sector, its regulators and the rating agencies.
"Fourth - is the re-grading of the Isle of Man fair and reasonable?
"Yes - while I disagree with S&P's suggestion that the Island's lack of monetary flexibility is a problem, logically we should remain tied to the GBP - being too small to have our own currency.
"However, as asserted by S&P, it is a fact that the global recession, particularly any downturn in the UK, will have an impact on the Island. S&P point out that the Island may be upgraded if we manage to diversify and grow the economy.
"Fifth - should the Isle of Man do anything to regain AAA status?
"Yes - while we should neither appeal the decision nor indulge in hand-wringing we can ensure that the Island has sensible and credible growth policies.
"This is the Chief Minister's aim and if he is able to assure the world that we have a logical plan to promote economic growth, with proposals to implement it effectively, he will go a long way towards achieving the clear, certain direction that is needed to install confidence and encourage business to develop on the Island.
"Sadly in most countries in the EU there is a lack of leadership and convincing growth strategies which is why the break-up of the Eurozone now appears both inevitable and desirable."
Manx Business Connection is an independent body that works closely with the Isle of Man Government and the Island's business community to encourage business development on and from through the Isle of Man.
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Also see: Isle of Man loses AAA rating from Standard and Poor's
