S&P said it may downgrade the UK from the highest rating in the future if economic conditions worsen and the government’s current plans change course.

If it took this action, S&P would be following in the footsteps of Moody’s which in February became the first rating agency to downgrade the UK from triple A status.

S&P said: “The outlook remains negative, reflecting our view of at least a one-in-three chance that we could lower the ratings if the UK’s economic and fiscal performances were to weaken beyond our current expectations.”

It now expects the UK economy to grow by an average of 1.6% a year over the next three years. This is lower than the official forecast given by the Office for Budget Responsibility.

The Treasury welcomed S&P’s decision: “In today’s reaffirmation of our credit rating, Standard & Poor’s stress the government’s commitment to continued fiscal consolidation.

“They specifically say that a downgrade could be prompted by a change in the government’s ‘willingness and ability to implement its ambitious fiscal strategy’.

“This serves as a reminder that our country cannot afford to simply run away from our problems.”