Measures should see country keep top rating

"The UK budget is supportive of the country's Aaa rating and stable outlook because it is a key step towards reversing the significant deterioration in the government's financial position that occurred over the past two years," the ratings agency said.

The statement, coming a day after a similar endorsement by Fitch, will be welcomed by Chancellor George Osborne who has staked his reputation on tackling Britain's deficit and keeping its top-notch credit rating.

The chancellor unveiled a package of spending cuts and tax rises on Tuesday designed to cut a record budget deficit to almost nothing in five years.

Standard & Poor's, which cut the outlook on Britain's 'AAA' rating to negative in May 2009, has yet to make a detailed response to the budget.

"The budget confirmed the UK government's intention to eliminate the structural current deficit by 2015-16," said Kenneth Orchard, Moody's Vice President. "Successful implementation would return the government's finances to a more sustainable trend."

But delivering extraordinarily sharp spending cuts will be far harder than announcing them.

Moody's said there were implementation risks associated with such a large fiscal tightening, but the budget went a long way to addressing growth concerns.

It noted the budget shows net debt stabilising at around 70 per cent of GDP in 2013-14 – a lower level than the rating agency had initially envisaged – before starting to decline.

"In Moody's view, this would, if achieved, ensure that, in all but the most extreme interest-rate scenarios, the UK's debt affordability would remain consistent with a Aaa rating," it said.