Budget - Industry and market reaction
Thursday, April 30th, 2009The price of British Government bonds plunged within minutes of the Chancellor sitting down as the Debt Management Office (DMO) revealed that it would be tapping investors for a much bigger than expected £240 billion this year.
The need for immediate extra government borrowing was far more urgent than most analysts had predicted.
“It’s massively worse than expected,” said Shahid Ikram, head of sovereign products for Aviva Investors.
The median forecast among City experts was for the Government to issue £180 billion of gilts this year. But the DMO, which raises money for the Treasury by issuing bonds, said that it would issue £220 billion of bonds this year plus £20 billion of shorter-dated Treasury bills.
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Budget - Industry and market reaction