Ranking students might be roughly correct, but many of the rankings in the middle where students are very similar are basically random.
Imagine there are two schools: A typical small private school, which normally achieves high grades, and a larger state school which normally achieves a broader spread. Normally the highest individual grade is achieved at the private school.
The historic average of the private school might be A-star, A, B, but predictions were A-star, A, A. Rankings are correct to the individuals' abilities. "Actual" or "deserved" standard could be A, A, A or A, A, B.
The state school's top 3 grades are normally A, A, B. This year you have a student who's capable (and likely) to achieve an A*. Teacher predictions for the top three grades are therefore A-star, A, A. Rankings are still correct according to ability.
Across the country the top 6 grades are normally A-star, A, A, A, B, B.
The private school uses the teacher predictions, because it has a small class: A-star, A, A.
We're now left with only A, B, B available to give to the top students at the state school, so the A-star, A, A assessed students are awarded A, B, B. Every one is a downgrade.
But it's OK, because across the country there's no grade inflation.
Thankfully the UK government have now decided to revert to the teacher assessed grades.