UK vows to stick with austerity

The UK government pledged to stick to its program of austerity even as sterling extended a recent slide Monday after the country was stripped of its AAA credit rating. Moody's cut its rating to Aa1 late Friday, saying growth would remain weak into the second half of the decade, making it harder for the government to deliver on its debt-cutting targets and undermining the ability of the U.K. to withstand future shocks."Britain has to stick to the course, and we will," finance minister George Osborne wrote in The Sun newspaper on Sunday. "For we've had a stark reminder this weekend of the single most important truth about our economy -- Britain has a debt problem, built up over many years, and we have got to deal with it." Moody's said it expected the U.K.'s debt to peak at 96% of gross domestic product in 2016, up from around 90% today. A downgrade had been talked about for months, against the backdrop of a deepening recession in Europe and Osborne's acknowledgment late last year that borrowing would remain higher for longer than expected. But it still served as a reminder of the poor growth prospects for the world's sixth biggest economy, and added fuel to speculation that the Bank of England will have to compensate for the lack of growth -- and the government's hawkish stance on fiscal policy -- by easing monetary policy still further. From: CNN