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S&P reaffirms UK’s AAA rating

by: Investment Week
  • 16/04/2012
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S&P reaffirms UK’s AAA rating
Standard & Poor's (S&P) has reaffirmed its AAA credit rating for the UK and forecasts the government's net debt burden will peak next year.

The ratings agency also confirmed a stable outlook for the UK, as it expects the government to implement the bulk of its austerity measures.

S&P is more optimistic on prospects for the UK than the other two major ratings agencies, Fitch and Moody’s.

They have placed the UK’s rating on ‘negative outlook’, warning of a possible downgrade on concerns about growth prospects and public debt levels.

In a statement, S&P said: “In our view, the UK has a wealthy, open, and diversified economy, supported by a well-established political system and macroeconomic policy framework, which can react quickly to economic challenges.

“We expect economic policy to focus on closing the fiscal gap, and we forecast the government’s net debt burden to peak in 2013 [at about 87% of GDP].”

Meanwhile, the Ernst & Young Item Club has forecast “dismal” growth for the UK of 0.4% this year, rising to 1.5% in 2013.

The independent forecasting group said the UK may have avoided a double-dip recession, but the economy will stall for the rest of the year.

It said UK businesses have stockpiled cash on their balance sheets and now need to increase investment to help drive growth.

 

 

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