A key credit rating agency has upgraded its opinion of the future prospects for the UK economy in light of its "robust and broadening" recovery.
Standard & Poor's (S&P) affirmed its top AAA rating on British sovereign debt and said it was switching its outlook from "negative" to "stable".
S&P has forecast growth of nearly 3% this year and 2.5% in 2015, saying it did not think fast-rising London house prices posed a risk to stability and that future rises would be "more contained".
But it warned that the rating would be at risk should Britain vote to leave the EU in the in/out referendum promised by David Cameron if the Conservative Party wins the next General Election.
The Government said a top credit rating agency's latest forecast on the UK economy showed the Coalition was on the right track with plans to cut the deficit.
Standard & Poor's said Britain's cherished AAA long-term credit rating will stay for now, but warned there was a chance of a downgrade.
The Treasury said:
The Standard and Poor's credit rating agency today confirmed the UK's AAA rating but warned that the outlook remained negative.
It means all three major agencies have now painted a bleak picture of Britain's economic outlook.
- The Moody's rating agency downgraded the UK to Aa1 in February - the first time Britain had lost its AAA rating since 1978.
- In March, the Fitch agency put the UK economy on negative watch, the first step to a credit rating downgrade.
- S&P has now reportedly affirmed the UK's AAA status, but with the caveat that there is "at least a one-in-three chance" it could be downgraded.
The Standard & Poor's credit rating agency said Britain remained at risk of losing its AAA rating, in a statement reported by the International Business Times.
"The outlook remains negative, reflecting 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 reportedly said.
The Standard & Poor's credit rating agency has renewed the UK's AAA rating, according to the Wall Street Journal's DJ FX Trader service:
The shadow chancellor Ed Balls has responded to Standard & Poor’s putting Britain’s credit rating on negative outlook:
The Standard & Poor's credit rating agency's revision of the UK's outlook from stable to negative is the third such blow for the British economy this year:
- Moody's rating agency placed the UK on negative outlook in February
- In March, the Fitch agency followed suit, dropping the UK's outlook from stable
- S&P today completed the trio of agencies warning that the UK's coveted AAA rating is in danger
On the only previous occasion S&P dropped the UK's outlook from stable to negative, George Osborne - then the shadow Chancellor - was quick to highlight its significance:
The comments are in marked contrast to his recent views on the issue.
Last week the ratings agency Fitch warned that the Government's missing its debt target "weakens the credibility of the UK's fiscal framework, which is one of the factors supporting the [AAA] rating".
But the Chancellor, in a marked change of tone, insisted that "the credit rating is one of a number of ways in which people look at countries."
A look at the press release issued by the credit rating agency Standard & Poor's, revising the UK's outlook to 'negative':