The value of the pound has once again weakened against the dollar and the euro in response to Chancellor Alistair Darling’s forecast of a huge increase in Britain’s public debt .
In his Budget speech, Mr Darling said that debt would increase to 68 per cent of the UK's economic output in 2010 and that total government debt would double to 79 per cent of GDP by 2013 - the highest level since the Second World War.
Following his announcement, sterling fell to $1.440 - its lowest level since early April. He pound also fell against the euro to 1.1127 euros.
This year’s sales of government debt are forecast to be £220 billion, higher than all market estimates, and analysts questioned whether investors would be as willing to buy UK bonds .
Russell Bloom, analyst at Action Economics, said: "The foreign exchange market is worried about the debt market's ability to absorb the amount of issuance for the next year."
"A lack of interest could see speculation of IMF aid rear its head again. I think this is the fear that is being priced into the market," he added.
Last week, sterling rose above $1.50 for the first time since the middle of January after analysts revealed the UK property market was starting to show signs of a recovery.
Pound Weakens As Chancellor Predicts Huge Rise In Public Debt
Thu, 23 Apr 2009
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