The ratings on the United Kingdom (U.K.) are supported by its diversified and resilient economy characterized by macroeconomic stability, microeconomic liberalization, and fiscal flexibility. The economy recorded its 14th year of uninterrupted growth in 2006, on the back of resilient consumer demand and still-expansive fiscal policy. The general government revenues-to-GDP ratio remains among the lowest in high-income countries, as does net debt, providing the U.K. with significant revenue-raising flexibility and ample room for maneuver to adjust fiscal performance. Nevertheless, the current government has embarked on an expansive path since 2001, sharply raising investment spending to improve critical public services. Combined with structural slippage on the current balance, this has resulted in a significant widening of the general government deficit. As
