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Moody’s joins Fitch and backs Osborne’s austerity Budget

THE massive £113bn fiscal tightening unveiled by George Osborne earlier this week should ensure Britain retains its AAA credit rating, Moody’s said yesterday.

The comments, which follow similar remarks from fellow ratings agency Fitch, will boost the chancellor, who has staked his reputation on ensuring Britain maintains the highest credit rating possible.

“The UK Budget is supportive of the country’s AAA rating and stable outlook because it is a key step towards reversing the significant deterioration in the government’s financial position that occurred over the past two years,” Moody’s said.

Osborne unveiled the toughest fiscal consolidation in Britain’s peacetime history on Tuesday, announcing a raft of sharp tax hikes and swingeing spending cuts.

“The Budget confirmed the UK government’s intention to eliminate the structural current deficit by 2015-16,” said Kenneth Orchard, Moody’s vice president. “Successful implementation would return the government’s finances to a more sustainable trend.”

Standard & Poor’s, which cut the outlook on Britain’s AAA rating to negative in May 2009, has yet to make a detailed response to the Budget.