Britain's triple-A sovereign debt rating could be at risk if slower economic growth makes it harder for the government to rein in its budget deficit, ratings agency Moody's said.
"The government's ongoing commitment to large-scale deficit reduction is very important to the Aaa rating and stable outlook," Moody's said the day after Chancellor George Osborne revealed downgraded growth forecasts in his 2011 budget.
"Although the weaker economic growth prospects in 2011 and 2012 do not directly cast doubt on the UK's sovereign rating level, we believe that slower growth combined with weaker-than-expected fiscal consolidation could cause the UK's debt metrics to deteriorate to a point that would be inconsistent with a AAA rating," Moody's said in a statement.
Moody's downgraded its own forecast for British growth this year to 1.6 per cent from two per cent, below the 1.7 per cent forecast by the government's independent Office for Budget Responsibility in the Budget.
Preserving the triple-A sovereign debt rating that Britain enjoys from the major ratings agencies is a top economic priority for the government.
Britain's budget deficit totalled around 11 percent of gross domestic product in the 2009/10 fiscal year.