S&P only last month confirmed its "stable outlook" for the country's sovereign debt but may now be forced to review the top-notch rating.
The change has been prompted by the Government's asset protection scheme – insurance for toxic debt – which will leave the taxpayer exposed to losses on billions of pounds of bad loans made by the banks.
A downgrade would be calamitous for the country, which is on course to borrow an extra £500bn over five years, taking the national debt above £1 trillion for the first time. Should the UK lose its AAA rating or even be put on "negative watch", the country's interest bill would soar – putting further strain on the economy.
S&P indicated it might have to revisit the rating in evidence before the Treasury Select Committee last month. Under questioning, Barry Hancock, head of European corporate ratings, said S&P had confirmed the UK's status on the assumption that "up to approximately 20pc of GDP in the form of bank assets could be problematic in the future".
With annual economic output running at £1,400bn, 20pc would equate to £280bn. However, it has since emerged that the Treasury is preparing to ring-fence about £400bn of "toxic" bank debt – or 29pc of GDP – to draw a line under the financial crisis. Royal Bank of Scotland is said to want to use the scheme for £200bn alone.
A ratings downgrade or a shift to "negative watch" could be devastating for the Government's planned economic stimulus package. As recently as last November, Frank Gill, S&P's director of European sovereign ratings, raised concerns about the Government's spending plans, warning that net debt above 60pc of GDP could undermine the AAA rating. Economists have forecast debt to reach 70pc of GDP by 2011.