Standard and Poor's cut in Britain's sovereign rating outlook doesn't just pressure Gordon Brown - it puts the spotlight firmly on whoever leads the next government, most likely opposition leader David Cameron.

Britain is due to hold elections by June 2010, although the opposition Conservatives are calling for Labour Prime Minister Gordon Brown to call one much earlier, citing in part public anger at politicians after a scandal involving expenses of MPs of all parties.

"What S&P has effectively done is put a gun to the head of the next government," said Russell Silberston, head of global interest rates at Investec in London. "It has to get the deficit under control. It will have to be tax rises or spending cuts and probably a combination of both."

Recent polls showed support for Labour at an all-time low of just 22 per cent against a Conservative 41 per cent, giving them a landslide in any election. But so far, the Conservatives have been relatively reticent in defining what they would do in office.

"In some ways, it's in David Cameron's interests to say as little as possible ahead of the election on what action he would take - it's effectively his to lose," said Howard Archer, chief UK and European economist at IH Global Insight. "On the other hand, if it becomes clear the Conservatives are going to get a stonking majority markets are going to expect him to be more precise."

For S&P and other rating agencies - trying to restore their credibility after being blamed for giving good ratings to firms and financial instruments that then folded - the key emphasis will be on government spending and debt. Most investors concur.

S&P warned that British government debt could approach 100 percent of gross domestic product and remain near that level for some time, noting that while all parties supported some spending tightening their intentions would remain unclear until after the election.

"Politics is definitely part of the scenarios we have to look at now for the first time in a long time," said Investec's Mr Silberston.

If the election took place sooner than expected, that might mean spending cuts were introduced earlier - giving the row over MP's expenses more potential market impact.

The nightmare scenario for markets would be a hung Parliament and policy stalemate, but few expect that.

While talking generally of "austerity", the Conservatives have provided little detail and analysts say that few politicians would risk talking up cuts to public services before going in to the election.

Defence is a hard cut given operations in Afghanistan, while health and social spending are already pressured and education cuts might be equally unpopular for a government that would have to face polls again within five years.

But some expect them anyway.

"It is important we have an understanding of the next government's deficit reduction proposals," said Mr Silberston. "But even if this is left vague for political reasons, the market will tend to look through this and assume the next government will have to get to grips with the public finances whatever they say during a campaign."

Ultimately, Cameron's fate will be far from in his own hands. What will happen to sterling and British markets in general will be determined much more by the global economic climate and Britain is seen as simply too small to influence that hugely one way or the other.