In a move that could push up national borrowing costs, Standard & Poor's said: "In the absence of a strong fiscal consolidation plan, the UK's net general government debt burden may approach a level incompatible with a AAA rating."
Both S&P and Fitch have postponed any final decision on whether to cut the rating until after the election. But they have both warned that cuts beyond those announced by the chancellor, Alistair Darling, in the budget last week are needed to keep the country's top credit mark.
Shadow chancellor, George Osborne, announced plans to use spending cuts to finance a reduction in national insurance contributions next year. However, the Institute for Fiscal Studies said the move could put Britain's recovery at risk as it would force the government to cut spending more than expected.
S&P kept its negative outlook on the economy as government debt is expected to rise to 77% of gross domestic product in 2010 and approach 100% by 2014, more than double the 44% in 2007, S&P said. "Additional spending measures will likely be required to put the public debt burden on a clear downward trajectory later in the current decade."
Neil Williams, chief economist at Hermes Asset Management, said: "It's a little risky suggesting that further fiscal tightening is not required. In the run-up to a general election, it's inevitable that politicians will want to keep their powder dry, not to scare the electorate."
Activist investors, known as bond vigilantes, will be "fairly impatient" to see drastic budget cuts after the election, Williams said. "They will have to resist the temptation to get the economy going again, and only later turn the fiscal screw. Gilt markets will be looking for the fiscal screw to be turned after the election."
Investors have sold UK bonds since the budget last week, pushing the yield of the 10-year bond to 3.97%, from 3.91% before the budget was announced. Britain's 10-year bond yields are above the 3.14% offered by the rock-solid German bunds, and the 3.92% offered by Italian debt.
Pimco, the world's largest investor, considers UK government debt a "must avoid" investment area and said it will not review its position until more clarity is given on how and when the deficit will be cut.
