Britain must go ‘further and faster’ to bring down deficit says Cameron

Mr Cameron’s comments came after official figures showed that GDP grew by just 0.2 per cent in 2012 – up from a previous estimate of zero growth, but below the 0.8 per cent forecast by the Office for Budget Responsibility at the time of last year’s Budget.

At Prime Minister’s Questions in the Commons, Labour leader Ed Miliband described the downgrade by Moody’s as a “humiliation” for Mr Cameron and Chancellor George Osborne, who had made safeguarding the cherished AAA rating a key test of the Government’s economic policy.

But Mr Cameron retorted that it was “a reminder of the debt and the deficit problem” which the UK faces.

In his first public comment on last Friday’s downgrade, the Prime Minister said: “It demonstrates we have to go further and faster on reducing the deficit.”

Mr Cameron’s official spokesman played down the significance of the remark, insisting that the PM was merely restating the Chancellor’s previous announcements that his austerity programme has been extended from 2015 to 2018.

Several Cabinet ministers are already reported to be resisting further cuts to their departmental spending, as Mr Osborne tries to find £10bn of savings for 2015/16 without tearing up the protection so far granted to the budgets for the NHS, schools, overseas aid and pensioner benefits.

According to analysis by the Institute for Fiscal Studies, the communities and local government budget could be cut by a further 7.2 per cent, transport, energy and culture by four per cent each and justice, defence and the Home Office by up to 3.5 per cent.