UK downgrade pressures reluctant Osborne to change course
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British finance minister George Osborne said he would not flinch from his austerity drive, despite increasing pressure to change course after the loss of the country's 'AAA' credit rating and with elections approaching in two years. Moody's dealt Britain its first sovereign rating downgrade on Friday, saying the $2.5 trillion economy faced years more sluggish growth and debt would continue to rise until 2016.
Economically the one-notch cut will have limited importance - most of Europe, Japan and the United States have already suffered the same fate, and Britain continues to borrow at historically low rates.
But politically it is toxic for Osborne, who has repeatedly vowed to protect Britain's top credit rating since the 2010 election campaign. The downgrade exposes him to opponents who say his failure to deliver economic growth is driving Prime Minister David Cameron towards electoral defeat.
Osborne said on Sunday the move by Moody's showed he was right to focus on restoring Britain to fiscal health, which he said was the only way to get growth going again.
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