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Its currency is strong against its closest neighbor, the euro, and the cost of its long-term debt is at almost Germanic levels. Yet, to many, the U.K. doesn’t feel like the safe haven this implies.
There are several schools of thought on last week’s worse-than-expected GDP data , which suggested that the U.K.’s economy shrank by 0.7 percent in the second quarter of 2012 and led to several high-profile forecast downgrades.
Standard & Poor’s released a note reaffirming Britain’s triple-A rating Friday. On Wednesday, rival Moody’s cut forecasts for the U.K. and warned the government’s austerity timetable was becoming more and more difficult to stick to. It now predicts growth of 0.4 percent for this year and 1.8 percent for 2013.
The data, which suggested that the U.K.’s economy shrank by more than struggling Spain’s in the same period, has already been disputed. Economists scratched their heads over how to reconcile these numbers with more positive jobs data, and argued that the U.K.’s statistics body hadn’t factored in the effects of bad weather and the Jubilee public holiday.
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