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Fitch says Osborne's budget target offers UK little flexibility

Britain's Chancellor of the Exchequer George Osborne leaves the Treasury to present the Autumn Statement to Parliament in London, Britain November 25, 2015. REUTERS/Andy Rain/pool

LONDON (Reuters) - Credit ratings agency Fitch said on Friday that Chancellor George Osborne's goal of reaching a budget surplus within four years gave little scope to respond to even a modest downturn in the economy.

Fitch, which rates British sovereign debt one notch below triple-A, said Osborne's announcement on Wednesday that he was scrapping planned spending cuts on the back of more bullish tax forecasts "may pose downside risk to fiscal targets".

"Debt reduction is increasingly being driven by underlying growth and revenue trends, which could reverse -- for example, if growth slows or revenue forecasts are revised back down," Fitch sovereign analyst Gergely Kiss said in a statement.

"The nominal deficit target implies limited fiscal flexibility to respond to modest adverse economic shocks," he added, echoing comments made earlier this week by Britain's Institute for Fiscal Studies, an independent think tank.

(Reporting by David Milliken; editing by William Schomberg)