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British finance minister faces 'downgraded Chancellor' jibe

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(Globalpost/GlobalPost)

British finance minister George Osborne pledged Monday to continue slashing the deficit after Moody's stripped Britain of its AAA rating, as the opposition Labour party labelled him the "downgraded Chancellor".

Chancellor of the Exchequer Osborne told lawmakers that markets had shrugged off the loss of the nation's top-level credit assessment, as traders gave their verdict to the Moody's downgrade which was delivered on Friday.

Labour opposition finance spokesman Ed Balls described Osborne as the "downgraded Chancellor", accused him of being in "complete denial" over the loss of AAA status and asked for a new plan to boost jobs and growth.

Osborne, who unveils his next annual budget on March 20, replied that the Conservative-Liberal Democrat coalition government was still sorting out the record deficit that was inherited from the previous Labour administration.

"This rating decision is a stark reminder of the debt problems built up in Britain over the last decade and a warning to anyone who thinks we can run away from dealing with those problems. We... will not do that," he said.

"I can report that we have not seen excessive volatility in the markets today. Ten-year government gilts are broadly flat, trading at 2.1 percent, within the trading range of the last week and near the very lowest rates of borrowing in our history.

"The FTSE 100 is currently up and the credit rating is an important benchmark for any country but this government's economic policy is tested day in and day out in the markets and it has not been found wanting today."

The price of British 10-year debt bonds, known as gilts, rose slightly in late afternoon trading on Monday and the interest rate dipped slightly to 2.077 percent from 2.109 percent on Friday, before Moody's had downgraded Britain's triple "A" status.

"If we accept the outcome of the rating agency decision we must accept the reasons given for that decision," added Osborne on Monday.

"Moody's point to the combined impact of what they describe as slow growth in the global economy and the necessary domestic public and private sector deleveraging process -- in other words, the process of winding down the huge debts that built up in our society over the last decade.

"That is the environment we are operating in. Dealing with the very high deficit and debt trajectory that this country had coming out of the financial crisis, made more difficult by the economic environment abroad."

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http://www.globalpost.com/dispatch/news/afp/130225/british-finance-minister-faces-downgraded-chancellor-jibe