Labour blasts George Osborne over Britain's loss of AAA credit rating

Britain's opposition yesterday tore into the government over what it called its failed economic policies, after Moody's stripped the country of its coveted triple-A debt rating.

However, while analysts called the loss an embarrassment for Chancellor of the Exchequer George Osborne and his handling of Britain's debt and deficit problems, they said the downgrade would have a limited impact on international markets.

In a rebuff to London's hopes that sharp spending cuts would both gradually eliminate the deficit and give growth a boost, Moody's rating agency cut Britain's grade by one notch to Aa1.

Labour opposition finance spokesman Ed Balls tore into Osborne, saying the entire point of his austerity drive - retaining AAA status - had failed.

"The chancellor said this would be a humiliating blow and the first test of his policy was to avoid it, so clearly for him politically, it is a very, very bad moment," he told BBC television.

"Economically, the credit-rating decision itself makes no difference at all.