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Treasury: UK 'cannot run away from its problems'

A Treasury spokesman said today's Fitch downgrade was a sign that Britain must continue to reduce its debt:

This is a stark reminder that the UK cannot simply run away from its problems, or refuse to deal with a legacy of debt built up over a decade.

Though it is taking time, we are fixing this country's economic problems.

The deficit is down by a third, a million and a quarter new private sector jobs have been created and the credibility we have earned means households and businesses are benefiting from near record-low interest rates.

– Treasury spokesman

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Labour: Fitch downgrade 'humiliating' for Osborne

Labour's shadow chancellor Ed Balls said the Fitch downgrade was a "humiliating blow" to David Cameron and George Osborne.

This is another humiliating blow to a Prime Minister and Chancellor who said keeping our AAA rating was the number one test of their economic and political credibility.

And it ends a disastrous week for George Osborne’s economic policy after the IMF downgraded its UK economic forecasts again and warned Britain needs a plan B for jobs and growth.

It’s not the views of the credit rating agencies, but the economic realities they are responding to which should be ringing alarm bells at the Treasury.

Fitch is clear that their decision is a result of the weak growth performance of the UK in recent years.

They are responding to nearly three years of stagnation, rising unemployment and billions more borrowing to pay for this economic failure.

This downgraded Chancellor needs to wake up and realise that his failing economic policies are causing long-term damage and Britain’s families and businesses are paying the price.

When even your biggest allies – the IMF and the credit rating agencies – abandon you it really is time to put political pride aside and finally act to kickstart the economy.

– Ed Balls

UK 'no longer consistent with AAA rating'

Fitch Ratings has downgraded the UK from AAA to AA+, but said that the outlook is stable.

The rating actions follow the conclusion of the review of the UK's sovereign ratings initiated on 22 March.

Fitch has explained that the reason for the downgrade is that despite the UK's "strong fiscal financing flexibility", its ability to absorb further adverse economic shocks is "no longer consistent with an 'AAA' rating".

More: Fitch predicts 'heightened probability of downgrade' in March

Treasury statement on Fitch downgrade

A Treasury spokesperson said:

A week from the Budget, this is a reminder of why it is essential Britain sticks to its plans to deal with its debts. As Fitch itself says, the reason we are keeping our AAA rating is because of ‘the progress made in reducing the government’s structural budget deficit and the credibility of the fiscal consolidation effort’.

They are also clear that a downgrade would follow any ‘discretionary fiscal easing that resulted in government debt peaking later and higher than currently forecast’. This is a just another warning to anyone who believes there can be deficit financed giveaways in next week’s Budget.

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UK's economic outlook 'negative'

Fitch Ratings warned it could downgrade the United Kingdom's AAA rating in the next couple of years if the government fails to contain the expansion of its public debt.

The credit ratings agency also revised the outlook on the UK's rating to negative from stable, warning that the government has "very limited fiscal space to absorb further adverse economic shocks".

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