The UK has lost its triple AAA credit-rating for the first time ever after ratings agency Moody's decided on a downgrade.
Demoting Britain by one notch down to AA1, Moody's blamed weak prospects for economic growth and 'high and rising debt burden'.
The move is a blow to the fiscal policy of UK Chancellor George Osborne, who vowed to defend the triple A rating during the last election in 2010.
Slow recovery from the global financial crisis is being blamed on the target of slashing the budget deficit through austerity by 2015, but the Chancellor will remain steadfast in his approach despite the downgrade.
"Well, I think this is a stark reminder of the debt problems that Britain faces and the clearest possible warning to anyone who thinks we can run away from dealing with those problems," said Osborne.
Moody's says Britain's outlook is now stable, making any changes to the rating in the next year or so unlikely.
France and the United States have also lost their triple A rating from at least one ratings agency.
