Chancellor George Osborne called to Commons as pound tumbles

 
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George Osborne today came under fire from MPs over the loss of Britain’s gold-plated AAA credit rating.

The Chancellor was summoned to the Commons after the downgrade by rating agency Moody’s dealt a severe blow to the Government’s economic credibility.

Shortly after markets opened in Asia today, sterling dropped to a two-and-a-half year low against the dollar, buying $1.5069, before recovering. It also fell to 1.1375 euros, an 18-month low.

However, the FTSE 100 rose around 40 points to 6,375, and analysts said sterling’s turmoil could have been far worse.

“The prospect of sterling being weaker is actually very bad news for the economic recovery and very bad news for families who are already struggling from rising gas electricity and petrol prices,” said shadow Treasury minister Rachel Reeves.

Economic experts said that there had not been a bigger rush to sell the pound because traders had already priced in a ratings downgrade.

At one stage this morning, Britain’s cost of borrowing fell lower than the rate before Moody’s downgrade on Friday. The yield on 10-year gilts initially rose to 2.15 per cent before falling back to 2.103 per cent, below Friday’s 2.107 per cent.

Tory backbenchers are upping calls for tax and spending cuts to kickstart growth, warning that next month’s Budget is the “last chance saloon”.

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