Britain will not stray from its debt-cutting measures, finance minister George Osborne insisted on Tuesday, after credit ratings agency Moody's said the nation's prized triple-A rating risked being downgraded.

Moody's cited Britain's materially weaker growth prospects over the coming years, and the risk of a shock from the euro area as reasons for its decision to give the UK's top-notch rating a negative outlook, which implies a 1-in-3 chance of a downgrade.

The announcement came just weeks before Osborne delivers his Budget statement to parliament, and is likely to kill off any hopes the government will give a fiscal boost to the economy, which looks to be skirting recession.

Speaking in a radio interview, Osborne said that cutting borrowing would help to secure investor confidence and in turn boost growth.

For me it was a reality check for the whole political system that Britain has to deal with its debts, Osborne told BBC Radio 4.

Here is yet another organisation, in this case a credit rating agency, warning Britain that if we spend or borrow too much we're going lose our credit rating ... what that leads to potentially is a loss of investor confidence in our economy and then people don't invest in our economy you don't get growth and you don't get jobs.

If you don't deal with your debts, you will not have growth, he added.

Britain's Conservative-led coalition government has embarked on tough debt-cutting measures aimed at eliminating a budget deficit that was more than 10 percent of GDP when it came to power two years ago.

However, it has already been forced to admit that achieving this aim will take longer than it expected due to a weaker growth outlook.

Many economists have argued against the government's position that austerity can boost growth, urging it to soften its stance to protect the economy from a sharp downturn in the euro zone, which is Britain's biggest trading partner.

This is not a vote of confidence in what is happening in Britain because, as I have said consistently and in the face of the views at times of ratings agencies, is that without growth, without jobs, you can't get the deficit down, said Labour's finance spokesman Ed Balls.

NO BUDGET GIVEAWAYS

Economists said the Moody's action would only serve to strengthen the government's resolve and made it very unlikely there would be any giveaways in the March 21 Budget.

The decision is likely to reinforce the Government's commitment to its deficit-cutting measures and perhaps makes a loosening in next month's Budget even less likely than it already was, said Vicky Redwood of Capital Economics.

British gilt futures dipped in the wake of Moody's announcement and underperformed their euro zone counterparts, while credit default swaps on British government bonds widened, making it more costly to insure British debt against default.

However, analysts said gilts still looked a safe bet as the euro zone sovereign debt crisis remains unresolved, noting that Moody's downgraded its ratings for Italy, Spain and Austria.

The fact that Britain has an independent central bank that is currently buying UK government bonds to shore up growth, will also help cushion the blow to the gilt market.

While the UK is undoubtedly not immune from the euro zone crisis it does have the advantage of having its own currency that can act as a safety valve for external shocks, said David Tinsley, economist at BNP Paribas.

(Additional reporting by Kate Holton and Sarah Marsh. Editing by Jeremy Gaunt.)