The UK has lost its top AAA credit rating for the first time since 1978 on expectations that growth will “remain sluggish over the next few years”.

The ratings agency Moody’s became the first to cut the UK from its highest rating, to Aa1.

Moody’s said the government’s debt reduction programme faced significant “challenges” ahead.

Chancellor George Osborne said the decision was “a stark reminder of the debt problems facing our country”.

“Far from weakening our resolve to deliver our economic recovery plan, this decision redoubles it,” he added. “We will go on delivering the plan that has cut the deficit by a quarter.”

But the BBC’s political editor Nick Robinson said Mr Osborne now risks being dubbed the “downgrade chancellor”.

“Worse could follow if the Budget shows borrowing rising… but for most people, what will matter is not credit ratings or statistics but higher fuel, food and other prices and if interest rates go up,” he added.

via BBC News – UK loses top AAA credit rating for first time since 1978.

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