Vince Cable dismissed the loss of Britain's prized AAA credit rating as "background noise" today.
The Business Secretary admitted that Chancellor George Osborne had been eager to maintain the top level, but said the reduction to AA1 was "largely symbolic".
Speaking on the BBC's Andrew Marr Show, Mr Cable said:
In terms of the real economy there is no reason why the downgrade should have any impact.
These things do not necessarily affect the real economy but they reflect the fact that we are going through a very difficult time and we are trying to balance the need to get the deficit and the budget under control with the need to get back to economic growth.
The rating agencies have a pretty bad record. They are a bit like tipsters. They get some things right and a lot of things not right.
They are part of the background noise we have to take into account.
Former Deputy Prime Minister John Prescott has accused Chancellor George Osborne of "trashing the UK."
Writing in the Sunday Mirror, Prescott said:
– John Prescott
The Bullingdon Club used to smash up restaurants for fun.
Osborne and Cameron are trashing the UK with the most reckless and idiotic act of economic vandalism this country has ever seen.
This is a Chancellor who’s been downgraded from rubbish to absolutely useless.
If Cameron can’t get rid of him it’s because his fingerprints are all over this failed plan.
George Osborne has vowed to stick to his economic strategy despite Britain being stripped of its prized AAA credit rating.
The Chancellor struck a defiant note after Moody's downgraded the country to AA1 - warning that sluggish growth would continue for years.
Political Correspondent Carl Dinnen reports:
– TUC general secretary Frances O'Grady
This downgrade is a humiliating blow for a Chancellor who has staked his reputation on the UK's triple A credit rating.
The fact that economic stagnation, rather than current borrowing levels, has caused this downgrade proves that demand-sapping austerity is ultimately self-defeating.
With plan A now completely in tatters the Chancellor has an opportunity to change course next month and start prioritising growth and jobs over pleasing ratings agencies.
Speaking following ratings agency Moody's downgrading of the UK, Chancellor George Osborne said if the government were to abandon its commitment to tackle the UK's debt problem, the situation would get much worse:
Chancellor George Osborne has insisted the Government was delivering on its commitment to tackle the UK's debt problem after ratings agency Moody's downgraded the country's AAA credit rating.
After Britain's AAA credit rating was downgraded by Moody's, The Exchequer Secretary to the Treasury, David Gauke said it was "a disappointment that we are in this position".
But he added: "We really cannot ignore the fact that our deficit is high, higher than we would like and we are determined to focus on that and the response which is just to borrow more is reckless".
Shadow chancellor Ed Balls has said that the Chancellor needs to "change direction" after Britain's credit rating was downgraded from the top AAA rating by the Moody's credit agency.
He told ITV News, George Osborne's plan is not working: "He's choked off the recovery, borrowing's up, families are suffering and even the credit agencies are now saying it's failed".
The statement from Moody's confirming Britain's downgraded credit rating highlighted the problems the weak medium-term economic outlook poses for deficit reduction plans.
The agency said it now expects the "period of sluggish growth" to "extend into the second half of the decade", adding:
Moody's says that the country's current economic recovery has already proven to be significantly slower - and believes that it will likely remain so - compared with the recovery observed after previous recessions, such as those of the 1970s, early 1980s and early 1990s.