Chancellor George Osborne today refused to admit he had failed in his commitment to protect Britain’s credit rating.
In the wake of Moody’s cutting the UK’s credit rating one notch to AA1, Mr Osborne insisted that the country’s credibility was intact.
Asked if he had broken his commitment to protect Britain’s credit rating, he said: “I’ve consistently argued that Britain has a debt and deficit problem, that we’ve got to tackle that head on, that we’ve got to take tough measures to do that, and I think people understand that.
“In the end, the test of our credibility as a country is there every day in the markets when we borrow money on behalf of this country from investors all around the world.
“At the moment we can do that very cheaply with very low interest rates precisely because people have confidence that we have got a plan. We’ve got to stick to that plan and we are going to deliver that plan.”
When pushed further on whether he had broken a Conservative manifesto pledge from the 2010 general election, the Chancellor said the Government had held firm on its commitment to take unpopular but economically necessary measures.
“We made it very clear that we were keen to see Britain face its problems head on,” he said.
“I don’t think anyone looking at what this Government has done over the last couple of years would say we’ve run away from those problems, we haven’t taken the difficult decisions.
“Far from it, we’ve taken very difficult decisions - sometimes decisions that aren’t politically popular but decisions that are absolutely economically necessary.
“We told people before a general election we were going to do that, we have stuck to our commitment to do that.”
Despite Moody’s warning of “subdued” growth prospects as a reason for the downgrade, Mr Osborne pointed out that the UK was faring better than many European countries.
“Growth is weak across the entire Western world and of course right on our doorstep we have the eurozone in recession,” he said.
“Actually the British economy is doing somewhat better than many of those European economies.
“That is a tough neighbourhood that we’re in. We’ve also got the legacy of all the debts that were built up not just by government but in our banking sector and in our economy that we’ve got to work off.
“This is a very tough economic situation, you don’t have to tell me that, but we’ve got to confront those problems head on.
“For families who say, ‘what does this mean for me?’, my message is very clear - Britain’s got to tackle its problems, it’s got to tackle its debt issues, so that we can have low interest rates for people who want a mortgage, low interest rates for the person who wants to take out a loan to start a business, low interest rates so we go on creating jobs in the way that we have done in the last couple of years.”
He said the opposition’s plans would make a bad situation much worse.
“What is the alternative? The alternative you hear from the Labour Party today is that we should be borrowing much more,” the Chancellor said.
“The reaction to a downgrade of our credit rating is that we should be borrowing more and getting ourselves more into debt.
“I would say that is exactly the wrong response. I would say that’s exactly the response that would take a bad situation and make it very, very, very much worse.”