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The Canadian Press - ONLINE EDITION

Standard & Poor's sees better times ahead for UK as long as country stays in European Union

SAN FRANCISCO - Standard & Poor's is brightening its outlook for the United Kingdom amid signs that the country's economy will continue to grow at a healthy rate through next year.

The reassessment issued late Friday recast S&P's view on the U.K.'s credit rating to "stable" from "negative." The influential agency also reaffirmed its top-notch "AAA" credit rating.

But S&P warned that the rating could be imperiled if Britain leaves the European Union, a move the country's Conservative Party has pledged to put to a referendum in 2017 if it wins the next general election.

Defecting from the European Union would be a significant blow because the U.K. has considerable trade ties to the region and could lose inbound investments, S&P said.

For now, S&P sees mostly positive signs. The report foresees the U.K. economy expanding by nearly 3 per cent this year and 2.5 per cent next year.

S&P is optimistic about worker productivity and wages increasing. The agency is also encouraged with progress being made on the U.K.'s government budget deficits.

After adding it all up, S&P concluded there is only a one-in-three chance of a credit downgrade during the next two years.

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