Britain defends budget austerity despite ratings warning

Feb 14, 2012, 9:51 GMT

London - Britain will not divert from the path of budget austerity despite the warning from a leading credit rating agency that it could loose its cherished triple A credit rating, a key government minister said Tuesday.

In an initial reaction, George Osborne, the Chancellor of the Exchequer, interpreted the decision by Moody's Investors Service to change the outlook for Britain to 'negative' as a vindication of his policy of budget cuts.

'It's a 'reality check for anyone who thinks Britain can duck confronting its debts ... it's got to confront those problems head-on and that's precisely what I intend to do,' Osborne said in a BBC interview.

'We can't waver in the path of dealing with our debts and here is yet another organization warning Britain that if we spend or borrow too much we are going to lose our credit rating but, more importantly, what that leads to potentially is a loss of investor confidence in our economy,' he said.

However, Ed Balls, the finance policy spokesman for the opposition Labour Party, said the Moody's decision was a 'significant warning' to the government to change course.

Negative growth in the last quarter of 2011 and growing unemployment were further evidence that government policy had failed, he said. It was clear that the austerity measures had stifled growth, he added.

'If the policy is not working, you do not carry on regardless,' said Balls.

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