S&P stands by Britain’s triple A rating

Standard & Poor’s affirmed Britain’s triple A rating and gave it a stable outlook on Friday night in spite of fears for the top-notch grade after dismal economic figures this week.

The rating agency reiterated the country’s sovereign debt with its highest grade, arguing that the economy would improve toward the end of the year, and that the UK benefits from a central bank able to buy government debt – unlike eurozone members.

“In our view, monetary flexibility remains a key credit strength owing to the British pound’s role as a global reserve currency,” the statement said. “We project that despite recent weakness, the UK economy should begin to recover in the second half of 2012 and steadily strengthen, and we expect economic policy to continue focusing on closing the fiscal gap.”

Bond investors issued warnings about the safety of the triple A rating this week after output fell 0.7 per cent in the three months to June, the third quarterly contraction in a row. The economy is now smaller than when the Conservative-Liberal Democrat coalition took power in 2010.

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