S&P looking hard at UK rating after growth surge

By Marc Jones and Ana Nicolaci da Costa LONDON (Reuters) - Rating agency Standard and Poor's hinted on Wednesday that it could put Britain's AAA rating on a more stable footing if the country's stronger-than-expected growth looked to have become sustainable. Speaking about the prospects for global sovereign ratings in 2014, Moritz Kraemer, S&P's head analyst for EMEA said downgrades were still likely to outnumber upgrades next year despite the signs of improvement in the world economy. He added that Europe, the Middle East and Asia would again probably account for the bigger proportion of the cuts, though there were expected to be fewer moves and bright spots existed. He said the agency had been taken aback by this year's rebound in the British economy. S&P is the only one of the three main agencies to still have Britain at AAA after first Moody's, and then Fitch, took it down a notch this year, but it has the country on a 'negative outlook'. "We have been surprised on the upside on the growth performance so far this year on the UK," Kraemer said. "What we will be analysing and discussing will be (whether) our assessment of the sustainability of this particular pattern of growth would warrant a rating action one way or the other." This week has underscored the UK's resurgence. Data have shown manufacturing growing at its strongest in almost three years, and construction at a six-year high. Kraemer said the blistering surge in the UK housing market meant questions about sustainability remained, but otherwise said 2014 was likely be similar to this year in terms of global ratings moves. "There is likely to be a preponderance of downgrades compared with upgrades." "We still have a mild downside bias in the euro zone. (But) In a nutshell we should see fewer rating moves in 2014 than this year," he said. (Reporting by Marc Jones and Ana Nicolaci da Costa)