Britain yesterday became the first big economy to be warned in the financial crisis that it might lose its top-notch credit rating, in a move that raised fears of possible downgrades for other large industrialised nations.

Standard and Poor’s lowered its medium-term outlook on the triple A rating for the UK’s debt to 'negative' from 'stable' for the first time since the credit ratings agency started analysing the country’s public finances in 1978.

Though the agency lowered its outlook, it affirmed Britain’s AAA long-term and A-1+ shortterm sovereign credit ratings.

S&P based its warning on a forecast that net government debt risked approaching 100% of national income and staying at that level. 'A government debt burden of that level, if sustained, would in Standard & Poor’s view be incompatible with a AAA rating,' the agency said.

Financial Times, Daily Telegraph