PRESS ASSOCIATION -- Britain remains in "a fairly good position" to weather the current financial storms because of the market credibility earned by the Government's deficit reduction strategy, Business Secretary Vince Cable said.
Mr Cable was speaking as the world absorbed the shockwaves of the downgrading of America's cherished Triple-A credit rating for the first time in its history.
Rating agency Standard & Poor's said it was marking the US down a notch to AA+ because the deficit reduction plan passed by Congress on Tuesday did not go far enough to stabilise the country's debt situation.
However, it was not immediately followed by the two other major credit rating agencies, Moody's and Fitch, which continued to rank the US as a AAA nation, alongside Britain.
The downgrade sparked a biting response from America's largest creditor, China, which called on the US to end its "debt addiction" and even suggested that the dollar may have to cede its position as the world's reserve currency. India's finance minister Pranab Mukherjee said the situation was "grave".
The development came at the end of a week of turmoil on markets around the world, which saw the FTSE 100 in London lose almost 10% - or £150 billion - of its value, while the eurozone was rocked by fears over whether Italy and Spain can pay their debts.
Unconfirmed reports suggested that finance ministers or officials of the G7 group of industrialised nations may hold a telephone conference call over the weekend to steady nerves ahead of the markets opening on Monday.
Mr Cable said that the US downgrade had become "inevitable" following the wrangling between Republicans and Democrats in Congress over measures to get debt under control. The UK has avoided the danger of a similar downgrade - and the interest rate hikes that would result - thanks to the Government's actions to cut debt, he said.
The Business Secretary told Sky News: "Financial markets are now focusing on the credit-worthiness of governments. Three years ago, it was on the banks and banks' stability. Now it is on government debt.
"That's why the UK is in a fairly good position. I think the markets perceive that we have got a stable Government... and we have got on top of the deficit problem and have got a clear programme to deal with it."