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Instant view - S&P raises AAA rating outlook to stable

LONDON (Reuters) - Credit rating agency Standard & Poor’s raised the outlook on Britain’s triple-A credit rating to ‘stable’ from ‘negative’ on Tuesday, saying the government’s spending review last week showed its resolve to cut the deficit.

Moody’s and Fitch already had a stable outlook on Britain’s triple A rating.

TOM LEVINSON, FOREX STRATEGIST, ING

“It’s already been a good day for sterling with those surprise third quarter GDP figures and this is obviously good news. (S&P) is saying the plans out in place by the coalition government are credible. Government debt as a percentage of UK GDP in their view will peak at around 84 percent in 2013. There are forex managers around the world who are restricted to holding only triple-AAA rated government securities so this revised outlook is important.”

KENNETH BROUX, MARKET ECONOMIST, LLOYDS TSB, LONDON

“Rating agencies overall are pretty relieved and comfortable in a way at the way things were presented last week. It’s important to remember this is going to be a long slog, this is a 4-5 year plan but there’s certainly a good positive intent to do the necessary to reduce the deficit ... Obviously when you get the kind of GDP numbers like we got this morning then confidence will grow that those targets will be achieved over the forecast period. The triple “A” rating is affirmed and it’s looking good for now.”

LEWIS THORN, FX DEALER AT INVESTEC TREASURY SOLUTIONS

“This seems well timed. S&P have looked at the (GDP) figure and it has obviously compounded their thoughts. This has confirmed our position on being bullish sterling/dollar short term.”

MICHAEL SAUNDERS, ECONOMIST, CITI

“This is very important for the UK. As to whether it’s a surprise, no, because after the spending review, which laid out credible plans to get back to a sustainable fiscal path, I think it was reasonable for the rating agency to acknowledge that.

“This is a fair reflection of how far the UK has come compared with last year when the public finances were clearly on an unsustainable path.”

MARC OSTWALD, GILTS STRATEGIST AT MONUMENT SECURITIES

“I suppose a lot of people would have taken the whole CSR as making it likely. It basically takes as given that the government will succeed in what it is doing and that it’s a credible plan. I think there’s debate on that, but it’s up to

S&P.”

“One would say that at current yield levels and spread levels, no one had considered that there was any residual threat to the UK triple-A rating for the foreseeable future, so the boost to sterling and gilts is short lived.

“No one saw a downgrade as a realistic possibility since the budget.”

ALAN CLARKE, UK ECONOMIST AT BNP PARIBAS

“S&P has confirmed what the market had already concluded -- that Britain is now further away from a credit downgrade.

“It’s good news for the government. They’ve had the nod of approval from business, the markets and now S&P that it was right to cut the deficit aggressively.”

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