Britain is on the verge of slipping back into recession, Moody's Investor Service has slashed the country's Triple A credit rating, and the opposition is baying for the government to loosen the fiscal reins.

Even so, Treasury chief George Osborne is expected to cling to his message of austerity in delivering his budget Wednesday. Prime Minister David Cameron has said that spending cuts and tax increases are the way forward. Only weeks ago, he offered a defense of the Conservative-led government's economic policies, pointing to an uptick in exports and lower unemployment.

The economy shrank by 0.3 percent in the last three months of 2012, with predictions of another contraction in the first quarter of 2013. That could lead to a recession for the third time in about four years.