By Robert Hutton and Gonzalo Vina

February 14 (Bloomberg) — Chancellor of the Exchequer George Osborne fended off accusations that he’s not doing enough to boost growth and said a warning by Moody’s Investors Service that Britain may lose its Aaa credit ratingshowed he’s right to focus on reducing borrowing.

“For me it was a reality check,” Osborne told BBC Radio 4’s “Today” show this morning. “It’s yet another reminder that Britain doesn’t have an easy way out of its economic problems. Of course the weaker growth prospects of Britain and just about every other economy is a challenge. People have a choice about where to put their money. If they don’t see Britain dealing with its problems, they will take their money elsewhere.”

The driver behind the change to a “negative outlook” for Britain’s Aaa rated debt is a “weaker macroeconomic environment,” Moody’s said in a statement in London late yesterday. Shocks from the euro area’s sovereign debt crisis are also weighing on the U.K., it said.

Osborne rejected criticism from the opposition Labour Party that he’s too focused on retaining Britain’s top-grade credit rating, arguing that keeping borrowing costs low is the best way to deliver growth. Ed Balls, Labour’s Treasury spokesman, said today that Osborne’s austerity program is getting in the way of economic expansion and risks tipping the U.K. into its second recession in less than three years.

‘Waking Up’

“I fear the world is making the 1930s mistake, and the ratings agencies are partners in this,” Balls told the BBC. “Today is the first evidence that even the ratings agencies are waking up.”

U.K. 10-year gilt yields were little changed at 2.12 percent at 9:41 a.m. in London after inflationslowed to the least in 14 months in January. The pound fell 0.3 percent to $1.5724, after earlier declining to $1.5686, a two-week low.

“The U.K.’s outstanding debt places it amongst the most heavily indebted of its Aaa rated peers, alongside the United States and France, whose Aaa ratings also carry a negative outlook,” Moody’s said.

Spending cuts that helped the U.K. preserve its top credit rating last year and bolstered the pound are now weighing on the currency as investors lose confidence. Sterling had its worst January since 2008 against a basket of nine developed-market peers, falling 0.6 percent, after a 3.1 percent advance in the second half of 2011, according to data compiled by Bloomberg. Gilts are lagging behind lower-rated Treasuries, after world- beating gains of almost 17 percent last year.