News Column

ECONOMY HAS DOWNGRADE THREAT LIFTED

June 14, 2014

By Hugo Duncan, Daily Mail, London



June 14--THE threat of another downgrade to Britain's credit rating was lifted last night in a boost for Chancellor George Osborne.

Standard & Poor's is the only major agency not to have stripped the UK of its AAA status but has rated the outlook 'negative' since December 2012.

Last night S&P raised the outlook to 'stable' and welcomed a 'robust and broadening recovery' and 'further progress' in repairing the public finances.

The rating came a day after Bank of England Governor Mark Carney warned that interest rates could rise before the end of the year as the recovery picks up pace.

Government borrowing costs and the pound soared but housebuilding stocks tumbled after Carney said a rate hike 'could happen sooner than markets currently expect'.

Better-than-expected construction figures fuelled expectations that rates will rise before the end of the year after having been frozen at 0.5pc since March 2009.

The Office for National Statistics said output in the sector rose 1.5pc between January and March compared with the 0.6pc increase initially reported. It said this would be enough to add 0.1pc to gross domestic product in the first quarter raising the growth rate from 0.8pc to 0.9pc.

The yield on 10-year gilts powered towards 2.8pc while the pound rose above euro 1.25 and towards $1.70. But the prospect of higher interest rates, and plans to give the Bank new powers to prevent the housing market overheating, sent shares in building stocks into reverse.

FTSE 100 builder Persimmon dived 7pc or 91p to 1211p while blue-chip rival Barratt Developments fell more than 6pc or 23.3p to 346.3p.

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(c)2014 Daily Mail (London, )

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Source: Daily Mail (London, England)


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