Glimmers of good news for the government include a stable unemployment rate -- 7.8% in the last quarter -- and low interest rates.
The yield on the 10-year Treasury bond fell over the year from 2.29% in February of 2012 to 2.11% now.
Osborne said in a statement that the downgrade was "a stark reminder of the debt problems facing our country," with a debt accumulated over the years exacerbated by Europe's economic crisis.
"Far from weakening our resolve to deliver our economic recovery plan, this decision redoubles it," he said, promising to press on with debt-cutting."We will go on delivering the plan that has cut the deficit by a quarter, and given us record low interest rates and record numbers of jobs," Osborne said.