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| UK loses top AAA credit rating for first time since 1978 | UK loses top AAA credit rating for first time since 1978 |
| (35 minutes later) | |
| The UK has lost its top AAA credit rating for the first time since 1978 on expectations that growth will "remain sluggish over the next few years". | The UK has lost its top AAA credit rating for the first time since 1978 on expectations that growth will "remain sluggish over the next few years". |
| The ratings agency Moody's became the first to cut the UK from its highest rating, to Aa1. | The ratings agency Moody's became the first to cut the UK from its highest rating, to Aa1. |
| Moody's said that the government's debt reduction programme faced significant "challenges" ahead. | Moody's said that the government's debt reduction programme faced significant "challenges" ahead. |
| Chancellor George Osborne said the decision was "a stark reminder of the debt problems facing our country". | Chancellor George Osborne said the decision was "a stark reminder of the debt problems facing our country". |
| "Far from weakening our resolve to deliver our economic recovery plan, this decision redoubles it," he added. | "Far from weakening our resolve to deliver our economic recovery plan, this decision redoubles it," he added. |
| "We will go on delivering the plan that has cut the deficit by a quarter, and given us record low interest rates and record numbers of jobs." | "We will go on delivering the plan that has cut the deficit by a quarter, and given us record low interest rates and record numbers of jobs." |
| In announcing the ratings cut, Moody's cited the "challenges that subdued medium-term growth prospects pose to the government's fiscal consolidation programme, which will now extend well into the next parliament". | In announcing the ratings cut, Moody's cited the "challenges that subdued medium-term growth prospects pose to the government's fiscal consolidation programme, which will now extend well into the next parliament". |
| It added that the UK's huge debts were unlikely to reverse until 2016. | It added that the UK's huge debts were unlikely to reverse until 2016. |
| The UK's net sovereign debt was the equivalent of 68% of the country's annual economic output, or GDP, at the end of last year. | The UK's net sovereign debt was the equivalent of 68% of the country's annual economic output, or GDP, at the end of last year. |
| The UK has had a top AAA credit rating since 1978 from both Moody's and S&P. | The UK has had a top AAA credit rating since 1978 from both Moody's and S&P. |
| "The very fact that we didn't see this downgrade happen in the past few years is a testament to the UK's credibility," Lena Komileva, an economist at G+ Economics, told the BBC. | |
| "There are no magic fixes for this kind of problem. It's not a question of what the government is willing to do, it is what it can do." | |
| Difficult road ahead | |
| All three major credit agencies last year put the UK on "negative outlook", meaning they could downgrade its rating if performance deteriorates. | |
| In his Autumn Statement in December, Mr Osborne acknowledged public finances were taking longer to rectify than planned, and admitted he would be forced to extend austerity measures by at least another year. | In his Autumn Statement in December, Mr Osborne acknowledged public finances were taking longer to rectify than planned, and admitted he would be forced to extend austerity measures by at least another year. |
| Germany and Canada are the only major economies to currently have a top AAA rating - as much of the world has been shaken by the financial crisis of 2008 and its subsequent debt crises. | Germany and Canada are the only major economies to currently have a top AAA rating - as much of the world has been shaken by the financial crisis of 2008 and its subsequent debt crises. |
| Gillian Tett, the US managing editor of the Financial Times, told the BBC that while it was "embarrassing" for the chancellor, many other large and respected countries have had their ratings cut as well. | |
| "Although there is never a good time to be downgraded, if there ever was a moment, it is now." | |
| A downgrade of a credit rating does not necessarily substantially damage the ability to borrow. | A downgrade of a credit rating does not necessarily substantially damage the ability to borrow. |
| The US - the world's biggest economy - was downgraded from its AAA rating last year, a move that has not materially changed its borrowing costs. | The US - the world's biggest economy - was downgraded from its AAA rating last year, a move that has not materially changed its borrowing costs. |
| The UK has experienced a double-dip recession since 2008. It grew in the third quarter of last year - boosted by the impact of the Olympics, but shrunk again by 0.3% in the last three months of 2012. | The UK has experienced a double-dip recession since 2008. It grew in the third quarter of last year - boosted by the impact of the Olympics, but shrunk again by 0.3% in the last three months of 2012. |
| Earlier this month, the Organisation for Economic Co-operation and Development said the Bank of England should be ready to inject more money into the economy to boost growth. | Earlier this month, the Organisation for Economic Co-operation and Development said the Bank of England should be ready to inject more money into the economy to boost growth. |
| The Bank has so far pumped £375bn into the financial system, creating money to buy-back government bonds. | The Bank has so far pumped £375bn into the financial system, creating money to buy-back government bonds. |