LONDON — At the root of Moody’s decision to downgrade Britain’s credit rating is a crucial economic reality: Britain has begun to trail its peers in Europe — even bailed-out euro zone economies — when it comes to bringing down its budget deficit and making it attractive for foreigners to buy its exports.

Prime Minister David Cameron and his increasingly jittery coalition government have made deficit and debt reduction a defining priority. In December, his powerful chancellor of the Exchequer, George Osborne, warned that an austerity program that had already resulted in the elimination of tens of thousands public-sector jobs would have to be extended for a year longer than planned, to 2018. But that same austerity program has contributed to long-term economic malaise.  Read more