George Osborne has said Moody's message is "explicit" to carry on with austerity.
He says "we can either abandon our efforts to deal with debts" or we can "redouble our efforts" and make a brighter future for our children.
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Saffie Roussos, believed to be eight years old, was described as a "beautiful little girl".
The first victim of the Manchester bombing has been named as Georgina Callander, a student from Lancashire.
A 23-year-old man has been arrested in connection with the attack at Manchester Arena last night.