The insurance giant, which manages £157bn of assets, said Britain’s ballooning budget deficit and the government’s unwillingness to take tough spending decisions created a “highly toxic” mix that could lead to its sovereign debt rating being slashed.

A downgrade by one of the major ratings agencies – Standard & Poor’s, Moodys or Fitch – would prompt a borrowing crisis. The fallout would mean that government bonds would become harder to issue and cost ever more in interest payments.

As anyone that has even heard the crackle of a newspaper in the last few months will know, the government currently has no clear plan to pay down the UK’s £178bn deficit.