Ratings agency Standard & Poor's has retained an AAA sovereign credit rating for the UK but says there is still a one in three chance of a downgrade next year.
S&P said its expectations for average annual real GDP growth of over 2% between 2013-2016 are "notably higher" than when it last affirmed the UK's AAA rating in April.
It also now expects public sector borrowing to drop by a further 1% of GDP in each of the next five years, meaning net general government debt will peak one year earlier in 2015 - at a lower level (89% of GDP) than previously assumed.
However, the ratings agency has also retained a negative outlook in case its forecasts prove too optimistic.
"The negative outlook reflects our view of at least a one-in-three possibility that we could downgrade the U.K. in the next year if our growth projections fail to materialise."
"Lower-than-expected growth could derail recent indications of an improvement in fiscal performance and reignite challenges to financial stability."
‘Important to have an anchor’
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