In addressing its recent downgrade from a triple-A credit rating, the British government said that Moody’s decision to lower the country’s credit rating to AA1 reveals a pressing need to reduce the national debt.
Moody’s said in its decision last week that slow economic growth would harm the government’s ability to control the rising debt and to confront economic shocks, NewsTimes.com reports
George Osborne, the head of the British Treasury, has long said that the AAA credit rating validates the efficacy of his spending and tax plan but recently stepped away from the statement, saying that the credit rating downgrade is not his administration’s fault.
“Ultimately that is the choice for Britain: we can either abandon our efforts to deal with our debt problems and make a difficult situation very much worse, or we can redouble our efforts to overcome our debts,” Osborne said, according to NewsTimes.com.
The ratings downgrade was the first for Britain, which managed to maintain its top credit rating during the global financial crisis, though economists said that the U.K. has been on the watch-list since last year.
Fitch Ratings and Standard & Poor’s, two other credit ratings agencies, have listed Britain under a negative outlook, which could indicate that the agencies are also ready to downgrade the country’s credit rating, NewsTimes.com reports.
The British economy has struggled to recover from flat performance in recent years. Government spending rose faster than revenue in December, and the economy is close to falling into a third recession since the beginning of the global financial crisis.
Osborne said that Britain’s credit rating could be further reduced if the government did not move forward with its fiscal plan.
“We will go on delivering on the economic plan that has brought the deficit down by a quarter,” Osborne said, according to NewsTimes.com.