Standard and Poor's Upgrades British Debt Outlook
Today, Standard and Poor’s reaffirmed their rating of the U.K.'s AAA debt instruments in response to the UK’s recently devised fiscal consolidation plan that is projected to reduce their deficit from around 11 to 3 percent of GDP in 2014. Within the AAA credit rating, S&P raised their outlook of U.K. debt from "negative" to "stable". Their ratings improvement comes as a result of the increased economic growth (by 0.8 percent) that has followed the coalition-implemented new budget and the expectations of future growth to come.
The positive results of the British fiscal consolidation prove the importance of fiscal sustainability for the U.S. as well—we must focus on similar deficit reduction planning if we want to ensure long-term economic growth. Furthermore, this shows that devising plans now for future fiscal consolidation can have positive economic effects in the short-run too, increasing consumer and investor confidence in the overall health of the economy.