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Britain’s ‘shock absorber’ economy to remain AAA – S&P

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The British economy's "capacity to absorb shocks" will help it to recover from recession and ensure it keeps its AAA credit rating, Standard & Poor's (S&P) said.

The agency said it expects the UK’s economy to recover in the remainder of 2012 before returning to growth next year.

Official figures released last week showed Britain’s economic output fell by 0.7% in the second quarter of 2012, extending the country’s double-dip recession into a third quarter. Some analysts had predicted a drop of no more than 0.2%.

But S&P said its outlook for the UK was stable, and gave its support to the coalition government’s austerity measures.

“In our view, monetary flexibility remains a key credit strength owing to the British pound sterling’s role as a global reserve currency,” S&P said in a statement.

“The stable outlook reflects our expectation that the UK government will implement the bulk of its fiscal consolidation programme and that the economy should recover in the remainder of 2012 and strengthen thereafter.”

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