Moody's wobbles on UK rating

Britain's cherished AAA credit status is under threat from the faltering recovery and higher than expected public borrowing, ratings agency Moody's warned yesterday.

The pound fell sharply and the news will come as a blow to Chancellor George Osborne. Moody's vice-president and senior analyst Sarah Carlson said: "We believe slower growth combined with weaker than expected fiscal consolidation efforts could cause the UK's debt metrics to deteriorate to a point that would be inconsistent with an AAA rating."

However, Moody's sources claimed her remarks had been taken out of context. One said: "Moody's rates the UK at AAA with a stable outlook. However, as we have been saying for a while now, slower growth combined with weaker than expected fiscal consolidation efforts could cause us to reconsider our stance."