The UK’s credit rating was downgraded by Moody’s on Friday, though the man in charge of the country’s economy says he won’t change his direction.
Instead, treasury chief George Osborne announced that the decision by Moody’s Investors Service only served to redouble his commitment to the government’s plan to cut spending and reduce deficits.
Osborne originally boasted about the country’s AAA rating, saying that it validated his policy for cutting spending, reports ABC News. But the treasury chief backed away from his stance as a downgrade became increasingly likely.
Fitch and Standard & Poor’s credit ratings for Britain are still AAA, but they are on negative watch. Moody’s downgraded the score one ranking from AAA to AA1.
Osborne also called the UK’s credit rating downgrade “a stark reminder of the debt problems facing out country.” The nation has seen a high debt accumulation over the years, along with an economic crisis much like that seen in the US and around Europe.
In response, Labour Party spokesman Ed Balls stated that the government should increase their borrowing and give an immediate stimulus to the economy.
BBC notes that Moody’s is the first agency to downgrade the country’s credit rating since 1978. In doing so, it stated that growth is expected to “remain sluggish over the next few years.
The agency also said that the government’s debt reduction plan faces significant “challenges.” Balls also called the downgrade a “humiliating blow” to Britain. He urged Osborne to act fast and “kick-start our flattening economy.” Balls explained:
“I have always said … that you should not set your policy by the credit ratings agencies. They have got things wrong in the past. But what matters is the underlying economic reality. There has been no growth now for two years, our deficit is getting bitter … the plan has not worked.”
But despite Britain’s downgraded credit rating, Osborne has said that he will not abandon the country’s “commitment to deal with that debt problem.”
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