Osborne defends economic strategy from Labour attack

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Chancellor George Osborne has come under pressure in the Commons over the recent downgrading of the UK's credit rating, but insisted he will not abandon his strategy.

On Friday, ratings agency Moody's revised the top AAA rating to AA1, for the first time since 1978.

Shadow chancellor Ed Balls said it showed the government's economic policy had failed - and urged the chancellor to change course.

Mr Osborne said it was "just one test" of the government's economic credibility as he answered Labour's urgent question on 25 February 2013.

The chancellor told the Commons there had been "no excessive volatility" in the financial markets in response to the ratings downgrade.

Defending his economic strategy, he said the deficit had been cut by a quarter, interest rates were low and jobs were being created in the private sector.

"We have got to convince the world we can pay our way in the world, and that is what this government is doing," he said.

But Mr Balls said Moody's decision was "a humiliation for the government" and branded Mr Osborne a "downgraded chancellor".

Labour backbencher Dennis Skinner claimed Mr Osborne was "not fit to deliver the next Budget", while his colleague, Pat McFadden, said it would be a humiliation for the UK to lose its AAA credit-rating.

Andrew Tyrie, the Conservative chair of the Treasury Select Committee, said Moody's downgrade was of "very limited value", arguing that the agency has "a dismal forecasting record".

Mr Osborne was supported by Conservative MPs, including Claire Perry, the MP for Devizes, who noted that two other main agencies "still maintain Britain's triple-A credit rating".

Liberal Democrat MP for Burnley, Gordon Birtwistle, accused the shadow chancellor of "politically-motivated antics".

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