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UK pound drops on election fears | UK pound drops on election fears |
(10 minutes later) | |
The pound has tumbled to a 10-month low as fears grow the UK will have a hung parliament in the upcoming election. | The pound has tumbled to a 10-month low as fears grow the UK will have a hung parliament in the upcoming election. |
The currency fell 1.6% to drop below the $1.50 level against the dollar for the first time since May. It has lost 7% against the dollar this year. | The currency fell 1.6% to drop below the $1.50 level against the dollar for the first time since May. It has lost 7% against the dollar this year. |
The pound also fell against the euro and most other major currencies. | The pound also fell against the euro and most other major currencies. |
Separately, the world's biggest bond fund manager Pimco told the BBC he is concerned about UK government debt unless drastic action is taken. | Separately, the world's biggest bond fund manager Pimco told the BBC he is concerned about UK government debt unless drastic action is taken. |
POUND STERLING V US DOLLARLast updated: 01 Mar 2010, 12:56 UK £1 buyschange%1.4907-0.0341-2.24 More data on this currency pair | |
According to a YouGov poll published in the Sunday Times, the Conservative lead over Labour has narrowed to two points - down from six points last week - the lowest in two years. | According to a YouGov poll published in the Sunday Times, the Conservative lead over Labour has narrowed to two points - down from six points last week - the lowest in two years. |
This could give Labour 317 seats, nine short of an overall majority, with the Tories on a total of 263 MPs. | This could give Labour 317 seats, nine short of an overall majority, with the Tories on a total of 263 MPs. |
A hung parliament - where no party has a majority - would make it harder to pass legislation and could hurt the nascent economic recovery. | A hung parliament - where no party has a majority - would make it harder to pass legislation and could hurt the nascent economic recovery. |
Prime Minister Gordon Brown has to call a general election by June. | Prime Minister Gordon Brown has to call a general election by June. |
Buyer's remorse? | Buyer's remorse? |
Pimco's head, Mohamed El-Erian, told the BBC the UK's creditors would become "significantly concerned" if the UK did not cut spending and grow quickly. | Pimco's head, Mohamed El-Erian, told the BBC the UK's creditors would become "significantly concerned" if the UK did not cut spending and grow quickly. |
He also expressed concern over other European nations with troubled public finances - such as Greece and Spain. | He also expressed concern over other European nations with troubled public finances - such as Greece and Spain. |
Governments need companies such as Pimco to keep buying their debt. | Governments need companies such as Pimco to keep buying their debt. |
If large bond buyers believe that governments will default on their debt or that they will keep falling in value, they will not buy the debt - further driving up the cost of borrowing for those countries. | If large bond buyers believe that governments will default on their debt or that they will keep falling in value, they will not buy the debt - further driving up the cost of borrowing for those countries. |
The UK's total borrowing for the financial year now totals more than £122bn. | The UK's total borrowing for the financial year now totals more than £122bn. |
Mr El-Erian told the BBC World Service: "If the UK cannot combine higher growth with fiscal adjustment, then its debt dynamics will continue to deteriorate to a point where its creditors will become significantly concerned." | Mr El-Erian told the BBC World Service: "If the UK cannot combine higher growth with fiscal adjustment, then its debt dynamics will continue to deteriorate to a point where its creditors will become significantly concerned." |
He added that there was only a "very small" chance that the UK would default on its debt. | He added that there was only a "very small" chance that the UK would default on its debt. |
Mr El-Erian previously was in charge of Harvard University's $30bn endowment fund. | Mr El-Erian previously was in charge of Harvard University's $30bn endowment fund. |
Pimco - or the Pacific Investment Management Company - is based in California and has more than $1 trillion of assets under management. It is a unit of German insurance giant Allianz. | Pimco - or the Pacific Investment Management Company - is based in California and has more than $1 trillion of assets under management. It is a unit of German insurance giant Allianz. |