Standard & Poor’s is brightening its outlook for the United Kingdom amid signs that the country’s economy will continue to grow at a healthy rate through next year.
The reassessment issued late yesterday recast S&P’s view on the UK’s credit rating to “stable” from “negative.” The influential agency also reaffirmed its top-notch “AAA” credit rating.
But S&P warned that the rating could be imperilled if Britain leaves the European Union, a move the country’s Conservative Party has pledged to put to a referendum in 2017 if it wins the next general election.
Defecting from the European Union would be a significant blow because the UK has considerable trade ties to the region and could lose inbound investments, S&P said.
For now, S&P sees mostly positive signs. The report foresees the UK economy expanding by nearly 3 per cent this year and 2.5 per cent next year.
S&P is optimistic about worker productivity and wages increasing. The agency is also encouraged with the progress being made on the UK’s government budget deficits.
After adding it all up, S&P concluded that there is only a one-in-three chance of a credit downgrade during the next two years.