Britain has held on to its triple A rating from Standard & Poor’s.
The rating agency chose not to follow the lead of Moody’s, a rival agency which stripped the country of its top rating this year.
In a statement on Friday that will bring some relief to the coalition government, S&P said it was maintaining the UK’s triple A rating.
However, the agency kept its outlook as “negative” and warned that economic growth would average 1.6 per cent a year between 2013 and 2016, slightly slower than Britain’s fiscal watchdog has forecast.
“We believe that the government will implement its fiscal mandate and that it has the ability and willingness to respond rapidly to economic challenges,” S&P said.
The outlook reflects “our view of at least a one-in-three chance that we could lower the ratings if the UK’s economic and fiscal performances were to weaken beyond our current expectations.”
S&P said its rating was predicated on the UK remaining a member of the EU.
“Our baseline assumption is that business investment will not be affected by uncertainty regarding the outcome of a possible referendum on EU membership,” it said.
Howard Archer, an economist at IHS Global Insight, said the news was unlikely to affect investors.
“The markets have long been expecting Fitch and, for that matter Standard & Poor’s to eventually follow Moody’s in taking away the UK’s triple A rating so this has been largely factored in,” he said. “There are also so few countries left now with a triple A rating, that to lose it is not the stigma or major threat to market confidence that it would have been, say a couple of years ago.”
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