BUDGETOliScarff:Getty

Some unsettling news for the Coalition government:

"The government's ongoing commitment to large-scale deficit reduction is very important to the AAA rating and stable outlook," Moody's said the day after George Osborne downgraded growth forecasts in his 2011 Budget.

"Although the weaker economic growth prospects in 2011 and 2012 do not directly cast doubt on the UK's sovereign rating level, we believe that slower growth combined with weaker-than-expected fiscal consolidation could cause the UK's debt metrics to deteriorate to a point that would be inconsistent with a AAA rating," Moody's said in a statement. Moody's downgraded its own forecast for British growth this year to 1.6pc from 2pc, below the 1.7pc forecast by the government's independent Office for Budget Responsibility in Wednesday's Budget.

The winter weather is not all to blame. The austerity measures already in place - and due to intensify over the next year - have clearly dented short-term growth. And that in turn has made deficits larger than they would otherwise have been. There are two cycles possible here: spending cuts that restore confidence in a country's fiscal health, leading to more growth and lower deficits; or spending cuts that depress growth which increases debt that forces new cuts. Britain does not have the luxury of a reserve currency to sustain the kind of long-term debt the US manages. But the data so far are not encouraging about the wisdom of short-term slashes in spending.

The US has an alternative, of course. No drastic cuts in government discretionary spending now, but substantive long-term entitlement reform and defense cuts that would revive business confidence and build on still-fragile growth. But that, alas, seems the least likely outcome of the next two years.

(Photo: A protester from the Public and Commercial Services Union demonstrates outside Parliament as Chancellor of the Exchequer George Osborne delivers his budget on March 23, 2011 in London, England. By Oli Scarff/Getty Images.)

We want to hear what you think about this article. Submit a letter to the editor or write to letters@theatlantic.com.