S&P sees brighter outlook for UK credit rating as budget risks recede

Ratings agency S&P Global revised up its outlook for Britain’s sovereign credit rating on Friday, removing the “negative” label which it applied after September’s “mini-budget” under then-Prime Minister Liz Truss.

“The government’s decision to abandon most of the unfunded budgetary measures proposed in September 2022 has bolstered the fiscal outlook for the UK,” S&P said.

S&P maintained its AA rating for British government debt and now has a “stable” outlook for the rating.

Under Prime Minister Rishi Sunak, Britain’s government has reversed most of Truss’s measures, which last year triggered a panic in bond markets that forced the Bank of England to intervene with billions of pounds of emergency bond purchases.

Lower energy prices have brightened Britain’s economic outlook – with the International Monetary Fund revising up its forecasts last week – although the squeeze on consumer spending from continued high inflation means the IMF still forecasts Britain’s economy will contract by 0.3% in 2023.

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