The UK will keep its top AAA credit rating, the Standard & Poor's (S&P) agency has said, according to BBC News.

It expects the British economy to pick up in the second half of this year, despite a slip into recession earlier in 2012.

That rating reflects a stable outlook and S&P said it expected the government would keep budgets tight.

The International Monetary Fund last week said the UK should slow its budget cuts if growth did not recover.

Its annual report on the UK said that tax rises and spending cuts introduced since the spring of 2010 had cut growth by 2.5% over the past two years.

S&P has now said in a statement: "In our view, monetary flexibility remains a key credit strength owing to the British pound sterling's role as a global reserve currency.

"The stable outlook reflects our expectation that the UK government will implement the bulk of its fiscal consolidation programme and that the economy should recover in the remainder of 2012 and strengthen thereafter."

The agency said it believed the British economy's "capacity to absorb shocks" had improved, with an increase in household savings and large corporations' cash holdings.