UK's AAA rating at risk: S&P

'Slow progress in fixing growth, deficit could cost the country its top-notch position'

Standard & Poor's yesterday warned Britain that worse-than-expected economic growth or slow progress in fixing its budget deficit could cost the country its top-notch credit rating.

S&P affirmed the UK's AAA sovereign credit rating but kept the outlook as negative.

"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 said in a statement.

Britain lost its AAA rating from Moody's in February, an embarrassment for the Conservative-led government which had promised to protect the country's credit rating when it took power in 2010.

But slower-than-expected economic growth since then has meant the government is behind on its programme to return the country to fiscal health.

S&P said on Friday it expected the British economy to grow by an average of 1.6 per cent a year between 2013 and 2016, slightly slower than forecasts last month issued by the country's independent budget watchdog.

Fitch said in March it was likely to lower its AAA rating on Britain before the end of April.

A spokesman for Britain's finance ministry noted S&P's comment that a downgrade could be prompted by a change in the government's determination to fix its fiscal shortfall.

"This serves as a reminder that our country cannot afford to simply run away from our problems," the spokesman said.

"There are no easy answers to a legacy of debt built up over a decade. Though it is taking time, we are slowly but surely fixing this country's economic problems."