Moody’s warns UK it could lose AAA rating

In its annual health check on Britain, Moody’s served notice to the chancellor that it would be carefully monitoring how he managed the difficult balancing act between growth and deficit reduction over the coming months.

The ratings firm said it had not yet decided whether to cut Britain’s credit rating but said it could act in the new year either if growth prospects worsened or if Osborne failed to stick to a demanding timetable for reducing national debt.

The move came on the day that the Bank of England said the boost that accompanied the Olympics in the summer would be a one-off and halved its growth forecast for 2013 to 1%.

Moody’s said: “The UK government’s most significant policy challenge is balancing the need for fiscal consolidation against the need for economic stimulus.”

The rating agency added that it would consider whether the UK should lose its AAA status in the new year once it had assessed how Osborne coped with its growth-deficit reduction dilemma in the Autumn Statement.

via the Guardian

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