UK on Moody’s radar; may lose prime rating

The United Kingdom has been warned by Moody's Investors service, one of the top three global rating agencies, that the country will lose its premium triple-A credit status if it sinks into a triple-dip recession this winter.

In its annual health check on Britain, Moody's served notice to Chancellor of the Exchequer George Osborne that it would be carefully monitoring how he manages the difficult balancing act between growth and deficit reduction over the coming months. It has put the UK on negative watch – the threat of a downgrade in February this year.

This is yet another indication that the Western dream, so tantalising to developing countries, may be souring – this is pretty much the same warning that all three ratings giants, Moody's, Standard & Poor, and Fitch Ratings, issued to the United States on Wednesday.

And these are pretty much the same concerns that are so exercising developing economies, including India's government and central bank.

Moody's said, "The UK government's most significant policy challenge is balancing the need for fiscal consolidation against the need for economic stimulus."

The agency said it had not yet decided whether to cut Britain's credit rating, but said it could act in the new year either if growth prospects worsened or if Osborne failed to stick to a demanding timetable for reducing national debt.