UK government loses its international credit rating...

Rating agency Moody's has stripped Britain of its top-grade AAA credit rating, citing slow growth and a rising debt burden.



After international agency announced the one notch drop to AA1, Chancellor George Osborne said it was a "stark reminder" of the country's debt problems.

Moody's said Britain's recovery was proving to be significantly slower than previous rebounds from recession and it did not expect the situation to change.

"[There's] increasing clarity that, despite considerable structural economic strengths, the UK's economic growth will remain sluggish over the next few years," it said.

Moody's is the first of the major credit rating agencies to knock the UK off of its top rating.

The ratings agency also cut the Bank of England's AAA rating by one notch, also to AA1.

Sky Economics Editor Ed Conway said: "The fact that Britain has lost its AAA crown for the first time since credit ratings were given to the UK back in the 1970s, it's a really big blow to Britain's reputation.

"It's something of an economic blow, but in a way it's more of a political problem for Chancellor George Osborne. He made a key part of the Conservative election pledge to safeguard Britain's credit rating."

On Friday evening, the Chancellor said: "We have a stark reminder of the debt problems facing our country - and the clearest possible warning to anyone who thinks we can run away from dealing with those problems.

"We are not going to run away from our problems, we are going to overcome them."

Moody's said that the British economy is constrained both by the troubled global economy and the drag from businesses and the British government slashing their debt burdens.

"Moreover, while the government's recent Funding for Lending Scheme has the potential to support a surge in growth, Moody's believes the risks to the growth outlook remain skewed to the downside," it said.