Britain calls negative Moody's outlook a 'reality check'

(LONDON) - Finance minister George Osborne said Tuesday that the negative outlook Moody's placed on Britain's AAA credit rating was a "reality check" for anyone thinking the kingdom could duck tackling its debts.

The influential credit ratings agency downgraded the debt ratings of six European Union countries and placed negative outlooks on the top AAA ratings of France, Britain and Austria, blaming the ongoing fallout from the eurozone crisis.

In Britain, Moody's pointed to "increased uncertainty regarding the pace of fiscal consolidation" due to "materially weaker growth prospects" over the coming years.

"Any further abrupt economic or fiscal deterioration would put into question the government's ability to place the debt burden on a downward trajectory by fiscal year 2015-16," it said.

Osborne said the assessment vindicated the austerity measures being implemented by the Conservative-Liberal Democrat coalition government, which are aimed at reining in Britain's budget deficit.

"This is proof that, in the current global situation, Britain cannot waiver from dealing with its debts," the chancellor of the exchequer said.

"Moody's are explicit that it is only the government's 'necessary fiscal consolidation' that is stopping an immediate downgrade, which would happen if there were any 'reduced political commitment to fiscal consolidation including discretionary loosening'.

"This is a reality check for anyone who thinks Britain can duck confronting its debts."

Meanwhile British Prime Minister David Cameron and US President Barack Obama held telephone talks late Monday in which they discussed the eurozone economy and the need for a sustainable and credible plan to ensure the financial stability of the euro currency, a Downing Street spokesman said.