UK's credit rating downgraded

Britain's credit rating has been downgraded from the top AAA rating to AA1 by the Moody's credit rating agency.

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Balls: George Osborne is running out of credibility

Ed Balls MP, Labour's shadow chancellor, has said tonight's credit downgrade is a "humiliating blow" to David Cameron and George Osborne.

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

It would be a big mistake to get carried away with what Moody's or any other credit rating agency says. Tonight's verdict does not change the fact that the credit rating agencies have made major misjudgements over recent years, not least in giving top ratings to US sub-prime mortgages before the global financial crash.

But what matters is the economic reality that the credit rating agencies are responding to. Moody's themselves say the main driver of their decision is the weak growth in Britain's economy. Their judgement is in response to nearly three years of stagnation, a double-dip recession, billions more borrowing as confirmed this week and broken fiscal rules. This is why the Chancellor is fast running out of credibility.

– Ed Balls

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