Moody’s action cites deteriorating outlook|
22 February 2013 Last updated at 22:41 GMT
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.
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".
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.
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.
All three major credit agencies last year put the UK on "negative outlook", meaning they could downgrade its rating if performance deteriorates.