S&P threatens to downgrade UK's credit rating, as it cuts outlook to negative

The UK's rock solid sovereign credit rating took another blow today with Standard & Poor's becoming the third major agency to downgrade the country's outlook from stable to ''negative''.

According to S&P, the change meant there was a ''one-in-three chance of the agency lowering the ratings in the next two years. The UK is already in the ''negative outlook'' category with both Moody's and Fitch, who plan to review the country's AAA status next year.

S&P added the decision reflected the weak recovery in the UK and sharply rising national debt. Many economists now believe the UK's loss of its cherished top-notch rating was a distinct possibility  with one of the three agencies expected to move in 2013.

Earlier in the day, chancellor George Osborne sought to play down the significance of the rating, which had been under close scrutiny after his dropping the debt reduction target he had set at last week's Autumn Statement due to weak growth.

''It's one test alongside others and the ultimate test is what you can borrow money at,'' he told MPs on the Treasury Select Committee (TSC). ''The test we have is one we have to meet every week when we go and try and sell our gilts.''

His words are at marked variance with the 2010 Conservative manifesto ''to safeguard Britain's credit rating'', according to commentors.