There are principally two dimensions to any such event - the political and the economic.
Politically, this is bad news for the Coalition, in particular the central leadership of the Coalition and especially among that small group, the Chancellor. Having used the AAA rating as a stick to beat the Opposition at every possible opportunity, the Chancellor now finds it snatched from his hands and gifted to the Opposition to use against him. For Ed Miliband, it must feel like Christmas - a chance to turn the whole economic narrative against the government, shifting the large section of public opinion that still blames the crisis on the past government towards blaming the Coalition.
But he must be mindful of the risks of singing the praises of Moody’s too loudly. Remember that this was one of the clutch of ratings agencies that, in the run up to the crash in 2007, was happily rating securities containing sub-prime mortgages as AAA. If you are building a strongly anti-financial sector narrative; Labour seem to be pressing hard to be tougher on the bankers than the Coalition; then singing the praises of institutions in the midst of that sector that seemed to have played such a major role in the crisis will only take you so far before it lands you in trouble.
Economically, of course, the question is whether the UK’s borrowing costs will increase at all. The experience of the US seems pretty clear - that borrowing costs barely changed after their downgrade by S&P, which came in the middle of far greater inaction by their central government. France’s fate is less clear, but I would contend that the UK looks far more like the US than France economically; far more competitive, far more flexible labour market and more. Either way, I do not think the Chancellor is going to have to make a meaningful allowance for higher debt payments as a result of this in the March budget.