S&P upgrades UK economic outlook

16 Jun 14
Ratings agency Standard & Poor’s has revised its outlook on the UK’s AAA credit rating from ‘negative’ to ‘stable’ in its latest examintion of the economy.

By Vivienne Russell | 16 June 2014

Ratings agency Standard & Poor’s has revised its outlook on the UK’s AAA credit rating from ‘negative’ to ‘stable’ in its latest examination of the economy.

‘The outlook revision reflects our view of the robust and broadening recovery in the UK economy and the further progress that the government is making on consolidating public finances,’ S&P said.

‘We expect the economy to expand by nearly 3% this year, and 2.5% in 2015, driven by business investment and private consumption… We anticipate that the UK’s economic recovery will continue will continue to broaden, benefiting the public finances.’

On budgetary consolidation, the agency noted that over the last three years, the government had implemented half of its target 10.1% of gross domestic product in fiscal consolidation.

Looking forward to the next Parliament, it said: ‘We recognise that the outcome of the 2015 general elections could lead to changes in fiscal settings, but out base-case assumption is that the next government will not abandon the goal of arriving at a position where the UK could start to pay down the stock of debt in absolute terms during the fiscal year ending April 2019.’

It added that the AAA rating was based on rating was based on the UK’s continued membership of the European Union. Leaving the EU would weaken the country’s economic prospects and be a negative factor for the rating and have a ‘disproportionate’ impact on the UK’s business and financial services sector, S&P said.

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