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UK Economy: Osborne Welcomes AAA Rating

(c) Sky News 2012

George Osborne has welcomed Britain's continuation of its AAA credit rating by a key agency.

The verdict from Standard & Poor's ratings agency showed the "world has confidence" in the coalition's economic policies, the Chancellor said.

"As Britain welcomes the world to our country for the  Olympic Games , this is a reminder that despite the economic problems we face, the world has confidence that we are dealing with them.

"The deficit has fallen by a quarter; inflation has fallen by half; employment is rising, with British businesses creating over 800,000 new jobs; and the economy is rebalancing, with Britain now exporting more to the rest of the world than Europe (Chicago Options: ^REURUSD - news) .

"And as S&P themselves say, what would damage Britain's creditworthiness would be relaxing our resolve to deal with our debts. We won't do that."

The news is a boost to Mr Osborne after weak GDP figures revealed on Wednesday drew heavy criticism of his performance and the Government's austerity measures.

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.

"In our view, monetary flexibility remains a key credit strength owing to the British pound sterling's role as a global reserve currency."

But it warned: "We could lower the ratings in particular if the pace and extent of fiscal consolidation slows beyond what we currently expect."

The statistics prompted coalition opponents to call for a change in course from the "failing plan" to revive growth, while some Tories called for Mr 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.

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