S&P said it could lower the UK’s rating “if fiscal performance weakens beyond current expectations.”
The ratings agency says: “The outlook revision reflects our view that we could lower the ratings on the UK within the next two years if fiscal performance weakens beyond our current expectations,”
“We believe this could occur in particular as a result of a delayed and uneven economic recovery, or a weakening of political commitment to consolidation.
“We expect economic growth to rise slowly in the medium term, with net general government debt as a percentage of GDP continuing to rise in 2015, instead of stabilising in 2014 as previously expected.”
The UK, Germany and Canada are the only major economies to currently hold the AAA rating.
S&P also revised its outlook on the Bank of England’s AAA rating to negative.
Last week, Fitch warned the UK’s AAA rating is likely to be downgraded in 2013 after the Office for Budget Responsibility cuts its prediction for economic growth.
The OBR’s new figures showed that the even after a five year parliament of spending cuts and tax rises, the Government will still be borrowing around one in every 10 pounds it spends.
The official growth forecasts increase debt to £105bn to 2016/17, making it impossible for Chancellor George Osborne to meet his target to reduce the share of public debt to national income by 2015/16.
Fitch, which has already put the UK’s AAA status on “negative outlook” in March, said “missing the target weakens the credibility of the UK’s fiscal framework, which is one of the factors supporting the rating.”