On Friday, the 21st, S&P Global Ratings revised its outlook for UK sovereign debt from negative to stable, indicating that short-term risks to the British economy have eased. Even so, the agency predicts a “modest” 0.5% contraction in the country’s gross domestic product (GDP) this year.
The agency reaffirmed the island nation’s “AA/A-1+” long- and short-term foreign and local currency ratings.
According to S&P, the financial situation improved after the government’s decision to abandon budgetary measures without the guarantee fund announced in September 2022. At the time, the package triggered severe volatility in financial markets and forced the resignation of the then prime minister. Minister Liz Truss.
The agency lowered its forecast for the general government deficit between 2023 and 2025 from 5.5% to 3.7%. Public debt is forecast to start declining from a peak of 97.7% of GDP this year.
“The government’s supply-side policy measures and improved relations with the European Union are likely to support medium-term growth prospects, despite existing structural constraints,” S&P assesses.
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