Leading article: Not much economic wriggle room

The shadow Chancellor claims that Moody's decision to place Britain's triple-A credit rating on "negative outlook" proves that the Government is cutting too far, too fast. Meanwhile, George Osborne insists that the agency's warning shot – suggesting a one-in-three chance of a downgrade to come – is a "reality check" that reinforces his commitment to cutting national debt.

With so much political capital tied up in their economic differences, it is little surprise that both parties are trying to make what they can of Moody's. Leaving aside the political posturing, however, and what is left is strikingly little room for manoeuvre.

In fairness, Ed Balls is half right: the rating agency is, indeed, concerned at Britain's lack of growth. But Moody's also makes clear that extra borrowing is no solution and that waning political commitment to debt reduction would be an even graver concern.

Whether or not rating agencies deserve their power, the reality of a downgrade is still to hike the cost of debt. That being so, the Government is right to take the threat seriously. The Chancellor certainly must do more to boost growth. But he must do it without recourse to the markets. For investors, consistency is all. Notwithstanding this newspaper's initial reservations at Mr Osborne's cuts, with the plan in place, the price for wavering is higher than that of continuity.

In fact, the most recent economic indicators are not all gloomy. On Monday, the CBI forecast a return to growth this year, and inflation is inching downwards at last, as expected. Add in the possibility of a deal over Greek debt (which would stave off a catastrophic default, at least in the short term) and Britain's double dip is not quite a racing certainty.

But avoiding recession is not enough by itself. Perhaps a greater challenge for the Chancellor – and one far more toxic than the arcana of credit ratings – comes with this morning's unemployment statistics. The outlook is grim. Joblessness is at more than 2.5 million already and set to keep rising, with young people hit worst. Mr Osborne's efforts at fiscal stability deserve recognition. Preventing a generation being lost to unemployment can be no less a priority.