The UK economy grew more than forecast in the third quarter and Standard & Poor’s said the nation no longer faces the risk of downgrade as pressure eases on the Bank of England to add more stimulus.
S&P today restored its outlook on Britain’s credit rating to “stable” from “negative” after warning in May last year that the nation’s top AAA grade was at risk. Gross domestic product rose 0.8 per cent in the quarter through September after climbing 1.2 per cent in the previous three months, the Office for National Statistics said in a separate report in London.
Prime Minister David Cameron’s government plans to cut half a million jobs to eliminate a budget shortfall that reached 11 per cent of GDP last year. With the recovery persisting, JPMorgan Chase & Co today put back its forecast for further stimulus by the Bank of England, whose officials have split three ways on whether to add more aid.
“Clearly, aggressive fiscal consolidation plans and better- than-expected growth this year have not gone unnoticed by the rating agencies,” Alan Clarke, an economist at BNP Paribas in London, said in a telephone interview. The growth result “makes any move on quantitative easing as early as November very challenging, but we’re still happy with our February forecast” for an increase in stimulus.
The pound jumped 0.9 per cent against the dollar today and traded at $1.5870 as of 12.27 pm in London. The yield on the benchmark two-year government bond was up 7 basis points today at 0.702 per cent.
