The Fitch credit ratings agency has downgraded the UK to AA+ owing to a weakened economic outlook.
The move, after Moody’s downgrade in February, came as Chancellor George Osborne defended the government’s austerity plan.
According to a British Broadcasting Corporation report, Fitch said its downgrade primarily reflected a weaker economic and fiscal outlook.
Osborne has said his was the “right plan” and that the economy was “healing”.
Fitch said its downgrade “primarily reflects a weaker economic and fiscal outlook” but returned its outlook to “stable”, removing the threat of further rate action in the near term.
Ed Balls, Labour’s shadow chancellor, said: “This is another humiliating blow to a prime minister and chancellor who said keeping our AAA rating was the number one test of their economic and political credibility.
“And it ends a disastrous week for George Osborne’s economic policy after the IMF downgraded its UK economic forecasts again and warned Britain needs a plan B for jobs and growth,” he said, referring to a report issued by the International Monetary Fund earlier this week.
In its twice-yearly World Economic Outlook published on Wednesday, the IMF slashed its forecast for growth to 0.7 per cent in 2013 after saying in January that the country’s economy could expect 1% growth.
Some IMF officials have recently raised doubts over Mr Osborne’s strategy.
On Thursday, IMF managing director Christine Lagarde said the UK should scale back austerity measures if growth were “particularly low”.
And IMF chief economist Olivier Blanchard warned that Mr Osborne was “playing with fire” if he continued his current strategy.
But the chancellor is sticking to his plan, saying he would defend his case when IMF officials visit the UK next month.
“Britain’s got the right plan in terms of dealing with its deficit,” he told the BBC, speaking before Fitch published its report.
“We’ve got a plan that gives us credibility in the world and enables us to borrow at very low interest rates.”