The UK has been stripped of its AAA credit rating and downgraded to Aa1 due to continued weaknesses in the UK’s medium-term growth outlook and higher debt levels

Moody’s Investors Service stated that “UK 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.” In addition, it stated that the “sluggish growth environment in turn poses an increasing challenge to the government’s fiscal consolidation efforts”.

The outlook on ratings for the UK however is stable, thus quashing fears that the UK could be downgraded further.

Schroders European economist Azad Zangana stated that the downgrade comes as "no surprise, with the economy double-dipping in 2012, and is currently on the verge of a triple-dip recession”.

He added: “The fallout of the downgrade is more likely to be felt in Westminster rather than the City, where Chancellor George Osborne has used the AAA rating as a benchmark for economic competence.”

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