Fears that Britain may be heading for its first sovereign debt crisis since the 1970s hit a new intensity after Pimco, the world’s biggest bond house, declared that it is starting to sell off its holdings of gilts. The move will be seen as a financial vote of no-confidence in the Government’s handling of the economy.
Paul McCulley, a managing director at Pimco, said:
We are currently cutting back in the US and UK because… supply and demand dynamics are likely to be negatively affected as borrowing rises and central bank buying declines.”
