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Budget proposals insufficient to retain Britain’s AAA rating, say rating agencies

Agencies have warned that UK’s current sovereign debt rating is under threat.

Ratings agencies Standard & Poor's (S&P) and Fitch have warned that retaining Britain's cherished AAA sovereign debt credit rating would require more cuts than those announced by Alistair Darling in the Budget last week.

They said the chancellor's plans to reduce fiscal deficit will not prevent a downgrade, which would have an adverse affect on the government's ability to raise funds, but both have warned on reserving judgement on fully downgrading the rating until after the coming general election.

S&P confirmed it is maintaining a "negative" assessment of the UK's public finances. "In the absence of a strong fiscal consolidation plan, the UK's net general government debt burden may approach a level incompatible with a 'AAA' rating," it has said. It added that it expected to review the long-term rating following the 2010 general election.