Moody's Investors Service said Friday that it has downgraded the domestic- and foreign-currency government bond ratings of the United Kingdom by one notch to Aa1 from Aaa.

The outlook on the ratings is now stable.

Moody's said the main driver for the downgrade is the increasing clarity that, despite considerable structural economic strengths, the UK's economic growth will remain sluggish over the next few years due to the anticipated slow growth of the global economy and the drag on the country's economy from the ongoing domestic public- and private-sector deleveraging process.

While the government's recent Funding for Lending Scheme has the potential to support a surge in growth, Moody's said it believes the risks to the growth outlook remain skewed to the downside.

RTTNews