28/07/2012 05:41 BST | Updated 28/07/2012 05:46 BST

UK's AAA Credit Rating Secure Despite Plummeting GDP, Says Standard & Poor's

A key agency has affirmed Britain's gold-plated AAA credit rating in a boost to the coalition Government's belt-tightening austerity measures following a week of heavy criticism.

Standard & Poor's (S&P) said its outlook for the UK's coveted rating was stable and predicted the economy would pick up in the coming months.

"We project that despite recent weakness, the UK economy should begin to recover in the second half of 2012 and steadily strengthen, and we expect economic policy to continue focusing on closing the fiscal gap," the agency said in a statement yesterday.

"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 its stable outlook for the rating reflected its "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".

Woeful growth figures released this week showed the UK economy sliding deeper into recession with a 0.7% fall in GDP between April and June.

The statistics prompted coalition opponents to call for a change in course from the "failing plan" to revive growth, while some Tories called for George Osborne to be replaced as Chancellor.

But Prime Minister David Cameron insisted the Government would "finish the job" of getting Britain's debt under control.