Britain suffered its first ever sovereign ratings downgrade from a major agency on Friday (February 22) when Moody's stripped the country of its coveted top-notch triple-A rating, dealing a major blow to Chancellor of the Exchequer, George Osborne.

Moody's said weak prospects for British economic growth, which have thrown the government's deficit reduction strategy off course, lay behind its decision to cut the rating by one notch to Aa1 from Aaa.

Austerity has been the watchword for Osborne's fiscal policy since his Conservative-led coalition came to power in 2010 after an election in which he vowed to defend Britain's triple-A rating, which can help keep down borrowing costs.

But a very slow recovery from the financial crisis has pushed back by at least two years the government's goal of largely eliminating the budget deficit by 2015's election.

"What this is, is a message from the debt agency - Britain's got a debt problem, I agree with that, I've been telling the country for years that we've got a debt problem, we've got to deal with it. What do they also say - that if we abandon our commitment to deal with that debt problem then our situation will get very much worse and I'm absolutely clear we mustn't do that," said Osborne.

The oppositionLabour Partyblames the deficit on too much austerity.

Nonetheless, Osborne insisted now was not the time to change course. His annual budget due on March 20 is expected to show a further deterioration in the country's fiscal outlook.

Presented by Adam Justice