Fears of a hung parliament continue to weigh on the pound as the beleaguered currency fell to a 10-month low on Monday. Prime Minister Gordon Brown is required to call a national election by June and early polls suggest that the earlier lead held by the opposition Conservative party, has narrowed considerably with some forecasters predicting a hung parliament. A hung parliament occurs when no party has a clear majority, opening the door to the possibility of a coalition emerging to form the new government.
Meanwhile, Pimco (Pacific Investment Management Company) issued a warning that the UK’s creditors are “significantly concerned” that Britain does not have a plan to deal with the country’s growing deficit.
“If the UK cannot combine higher growth with fiscal adjustment”, said Mohamed El-Erian, CEO of Pimco, “then its debt dynamics will continue to deteriorate to a point where its creditors will become significantly concerned.”
Source: BBC News
