Fitch Ratings changed U.K.'s outlook to negative from stable, stating that there is a one to two chance Britain would lose its top AAA rating within two years on the threats posed from anemic economic recovery, high sovereign debt, and risks from the European debt crisis.

Fitch said its decision reflects the very limited fiscal space to absorb further economic shocks in light of such elevated debt levels and a potentially weaker than currently forecast economic recovery.

The decision came one week before Chancellor of the Exchequer George Osborne announces his annual budget, where Fitch said Osborne's budget is expected to reaffirm the government's commitment to deficit reduction.