Shortly after U.S. trading closed on Friday, February 22nd, Moody's downgraded UK debt one notch from Aaa to Aa1 with a stable outlook. This downgrade is a natural extension of the "negative outlook" rating Moody's slapped on the UK a year ago. Moody's is projecting economic weakness into the second half of this decade; no surprise to anyone following the last Bank of England Inflation Report. Moody's is concerned that the UK's slower than expected growth will allow increasing debt burdens, peaking at 96% of GDP in 2016. This pattern presents "…a risk that the UK government may not be able to reverse the debt trajectory before the next economic shock or cyclical downturn in the economy." Thus, the UK does not possess the kind of policy flexibility that other Aaa-rated sovereigns have. However, on balance, the news is not too bad.