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U.K. retail sales dropped by 0.9% in March, the national statistics agency said Friday. That was down from a 1.1% rise in February.
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Ratings agency S&P Global revised up its outlook for Britain’s sovereign credit rating on Friday, removing the “negative” label which it applied after September’s “mini-budget” under then-Prime Minister Liz Truss.
“The government’s decision to abandon most of the unfunded budgetary measures proposed in September 2022 has bolstered the fiscal outlook for the UK,” S&P said.
S&P maintained its AA rating for British government debt and now has a “stable” outlook for the rating.
Under Prime Minister Rishi Sunak, Britain’s government has reversed most of Truss’s measures, which last year triggered a panic in bond markets that forced the Bank of England to intervene with billions of pounds of emergency bond purchases.
Lower energy prices have brightened Britain’s economic outlook – with the International Monetary Fund revising up its forecasts last week – although the squeeze on consumer spending from continued high inflation means the IMF still forecasts Britain’s economy will contract by 0.3% in 2023.
S&P said it expected British economic output to fall by 0.5% this year before growing by an average of 1.6% a year between 2024 and 2026.
“Near-term downside economic risks have reduced. That said, we forecast medium-term growth will be below historical averages,” it said. “The economic situation remains fragile.”
S&P also welcomed February’s agreement between Britain and the European Union over trading arrangements for the British province of Northern Ireland, which has remained subject to EU rules since Brexit due to its open border with Ireland.
“Although the direct short-term economic effect is unlikely to be significant, the agreement could eventually help improve UK-EU relations and, in turn, augur well for UK trade with the EU and related investment activity,” S&P said.
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