David Milliken and Daniel Bases
Feb 23, 2013
Britain suffered its first ever sovereign ratings downgrade from a major agency on Friday when Moody’s stripped the country of its coveted top-notch triple-A rating, dealing a major blow to finance minister George Osborne.
Moody’s said weak prospects for British economic growth, which have thrown the government’s deficit reduction strategy off course, lay behind its decision to cut the rating by one notch to Aa1 from Aaa.
Austerity has been the watchword for Osborne’s fiscal policy since his Conservative-led coalition came to power in 2010 after an election in which he vowed to defend Britain’s triple-A rating, which can help keep down borrowing costs.
But a very slow recovery from the financial crisis has pushed back by at least two years the government’s goal of largely eliminating the budget deficit by 2015’s election.