Moody warns Britain eurzone crisis could downgrade its AAA rating

Credit rating agency Moody has warned that Britian may be unable to keep its AAA rating in view of Britain's deteriorating public finances and growth look.

Moody's end-of-year assessment said the UK's AAA score was currently still safe but pointed to what it said were "formidable and rising challenges" ahead.

It has concluded Britain's ability to absorb further economic shocks while still keeping its stable outlook has deteriorated in the last year because of weak growth.

In addition to domestic risks, Moody warned Britain it would not be immune from a crisis in the eurzone next year.

"The currently stable outlook on the UK government's AAA rating depends in part on the assumption that the government will stay on track with its fiscal consolidation programme," Moody's said in a statement.

"However, any additional weakening in the macro-economic outlook or a need to support the banking system could temporarily set back the government's fiscal consolidation efforts. As a result, the outlook on the rating is likely to be sensitive to future developments in the euro area's debt crisis, even though the UK is not a member of the monetary union."

UK media said Moody's report is deemed as a blow for Chancellor George Osborne, who has repeatedly stressed the importance of retaining the rating, which determines the rate at which Britain can borrow money on the international financial markets.