The meaning of 'negative' for Mr Osborne and the UK

Officials are trying to appear "disappointed, but not surprised'" by Moody's decision to put the UK's sovereign credit rating on negative outlook.

This suggests that the UK now has a roughly 30% chance of losing its triple A rating in the next 18 months.

Moments after the decision was released, George Osborne rushed to claim it for his side, in the arguments about austerity and growth. The decision, he said, was "a reality check" for anyone who thought Britain could "duck confronting its debts".

The ratings agency said it was worried that slow economic growth would make it more difficult for the coalition government to bring Britain's public debt under control. It is also concerned about the continuing impact of the crisis in the eurozone, which has caused it to downgrade six other European countries as part of the same reassessment.

A further two countries with triple A ratings - France and Austria - have been given the same treatment as the UK.

In the contorted vocabulary of sovereign ratings, a "negative outlook" is much better than a "negative watch" - which suggests the chance of a downgrade in the next year or two is well over 50%.

Some will consider the decision odd, coming after a couple of months when the fear in European financial markets has been lifting, and the outlook for the US and broader global recovery has been getting a fair bit brighter. The UK government's cost of borrowing is still at an historic low.

Others will say it is simply irrelevant, these days, what a single ratings agency thinks about the UK. Didn't the reaction to the US downgrade by Standard & Poor's last summer, and even the same agency's mass downgrade of eurozone countries last month, demonstrate that the days of worshipping at the AAA altar were past?

It will be interesting to see whether the financial markets agree.

Until then, it's worth asking whether Mr Osborne is right to suggest that all this is one in the eye for Ed Balls and the Plan B school.

It is certainly true that there is no hint, in Moody's statement, that it would like to see the UK ease up on austerity. Quite the opposite.

It says that one of the things that would make it downgrade the UK over the next year or so would be if the economic outlook worsened significantly, and the government decided to ease up on cuts.

The two other big risks on the horizon, incidentally, are that the government suddenly finds it hard to refinance its debt, perhaps due to higher than expected inflation; or there are further problems in the banking sector, leading to further, expensive, bailouts.

However, you might argue that the basic fact of this decision is damaging to the government - even if the fine print is not.

After all, Moody's has provided an unhelpful reminder that austerity alone does not guarantee market confidence, or a Triple A credit rating.

When I interviewed the head of sovereign ratings at Fitch, David Riley, on the day of the Autumn Statement in November, he warned that Britain's debt stock was now going to peak at a very high level, for an AAA country.

In Mr Riley's view, the Treasury had lost quite a lot of room for manoeuvre in those lower growth and higher borrowing forecasts. Eventually, he thought the top rating might well come into question.

Moody's said something similar in December. Now its analysts have decided to take this further step.

Mr Osborne's fiscal tightening is necessary, in their view. But the statement asserts that squeezing the budget has inevitably - along with other factors - had an impact on growth. And it suggests that slow growth, in turn could make it much harder for the chancellor to prevent UK debt rising too far, too fast.

Put it another way, Britain could go through all this austerity and still lose its Triple A rating, due to a slow or stagnant economy.

So no, Ed Balls will not find support for Plan B in Moody's statement. But he will surely not miss the opportunity to point out that preserving Britain's top credit rating has long been a central plank of Mr Osborne's case for cutting the deficit faster than Labour.

For this ratings agency, at least, Britain's triple A is at greater risk now than at any time since Mr Osborne first walked into Number 11.