Moody’s rating agency has revoked Britain’s excellent credit rating, downgrading it one notch from AAA to Aa1. The agency cited slow growth and a rising debt burden.

The main driver for the downgrade was "increasing clarity that, despite considerable structural economic strengths, the UK's economic growth will remain sluggish over the next few years due to the anticipated slow growth of the global economy and the drag on the UK economy from the ongoing domestic public- and private-sector deleveraging process," said the agency.

Although Aa1 is still a very high rating, the downgrade could make it more difficult for the country to borrow on international markets.

The outlook on the rating in now stable, says Moody’s.

Reacting to the downgrade the British Chancellor of the Exchequer, George Osborne, said the blow only redoubled his resolve "to deliver our economic recovery plan," based on deep spending cuts.

Osborne insisted that the collation will not change their economic policy, which has been based on cutting public spending and has drew criticism from Labour and some economists who say it is stifling growth.

“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,” said Osborne.

Jack Rasmus, Professor of Political Economy at the Santa Clara University in the US, believes the downgrade was inevitable. “The trend in the UK is clearly towards less and less growth and it’s resulting in faltering the tax revenues and that means that debt and deficit is going to get worse.”

The deficit will rise, he predicts because the cost of borrowing will go up given the downgrade. “This is just the beginning of the continued slowing in the UK economy.”

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