The UK Government is most at risk of losing its AAA sovereign debt rating among the top-rated nations because of its huge budget deficit, Fitch, the ratings agency, warned today.

However, the country does not face the imminent threat of a downgrade, because whichever party is voted in at the next general election is then expected to announce radical measures to cut debts, Fitch added.

David Riley, the head of global sovereign ratings at Fitch, said that he has a “stable” outlook for gilts to reflect “our expectation that the UK Government will articulate a stronger fiscal consolidation programme next year”.

The pound dropped 0.9 per cent to touch $1.6602 as Fitch’s report reignited concerns about Britain’s budget deficit. Investors also fear that any ratings downgrade would prompt an outflow of capital from the UK, pushing sterling lower.

George Osborne, the Shadow Chancellor, said: “We all need to sit up and listen to this latest warning from an international credit rating agency. Britain is singled out for concern over the size of our debt crisis, and the message could not be clearer: if we don’t start dealing with those debts, we will face a downgrade. When will Gordon Brown listen?”

Mr Brown responded by saying: “We have assured people that we’re taking the necessary action to cut the deficit in half.”

Mervyn Davies, the UK Trade Minister, added: “I think that the government’s been very clear that over the next four years there’s going to be a programme to reduce the public debt level.”

Last month, Britain reported the biggest budget deficit for any September since records began in 1993 as the recession hit tax revenue and increased the cost of meeting unemployment benefit. The £14.8 billion shortfall compared with an £8.7 billion deficit in the year-earlier period.

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