S&P affirms UK's AAA rating, says outlook stable

LONDON – Credit rating agency Standard & Poor's on Friday affirmed Britain's its top-notch AAA rating, adding that it regards the country's economic outlook as stable.

The agency said it anticipated Britain would see "relatively modest real GDP growth of about 1.6 percent between 2012 and 2015," with the government's debt burden peaking in 2014.

It said the U.K. benefited from a "wealthy, open, and diversified economy, supported by effective political institutions that can react quickly to economic challenges."

The announcement is good news for British Treasury chief George Osborne, who is committed to slashing Britain's large debt through budget-cutting — a policy that has yet to deliver much economic growth.

Official figures show Britain's GDP grew by 0.7 percent in 2011, and the government expects the economy to perform only slightly better this year.

In February, ratings agency Moody's dropped Britain's outlook from "stable" to "negative."

Standard & Poor's acknowledged government fiscal policy would likely be a drag on economic growth, but said "the U.K. economy's capacity to absorb shocks has improved."

Osborne said the assessment was "a reminder that Britain is weathering the international debt storms because of the policies we have adopted and stuck to in tough times."

"Once again we are reminded that those who want to spend and borrow even more would lead our country into an economic catastrophe," he said.