Stheeman sees no risk of UK debt crisis as sterling slides

By Ambrose Evans-Pritchard, International Business Editor Published: 5:42PM GMT twenty-five February 2010

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Sterling tumbled dual cents opposite the dollar to a nine-month low of $1.5253 on headlines that commercial operation investment fell 5.8pc in the last entertain of last year Photo: AFP/Getty Images

Robert Stheeman, head of the UK Debt Management Office, pronounced the domestic elites are rising to the challenge, severely shortening the chances of a gilts strike.

"Politicians of all colours are receiving the incident really severely indeed. Investors get a lot of joy that there is agreement opposite the spectrum that the necessity needs to be brought underneath control," he told the Euromoney down payment association in London. While a hung Parliament would emanate uncertainties, it competence infer "less disruptive" than assumed.

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The comments came as argent tumbled dual cents opposite the dollar to a nine-month low of $1.5253 on headlines that commercial operation investment fell 5.8pc in the last entertain of last year, worsening the risk of a double-dip recession. Howard Archer, UK economist at IHS Global Insight, pronounced the interpretation was a "horrible surprise".

Jim Rogers, the millionaire financier, went serve notice that the bruise could "collapse" inside of weeks, heralding a downturn worse than 2008/09 and in spin heading to a "global mercantile winter".

Mr Stheeman pronounced the diseased bruise has acted as a shock absorber for UK gilts and done his pursuit easier, an substantial idea that those countries such Greece, Italy, Spain, and Portugal but their own inhabitant banking face a harder charge as the onslaught with origin debt deflation.

"Whenever argent does crop up to break from new strengths, essentially that tends to action as a matter for abroad interest. That"s utterly a poignant factor," he said.

A floating banking is a double-edged sword. Devaluation can pillow downturns, but can additionally set off a self-feeding spin if peaceful falls spin in to a unfinished rout. Bill Gross from the US down payment account Pimco pronounced last month that gilts were sitting on a "bed of nitroglycerine", notice that UK debt levels acted a critical devaluation risk.

Mr Stheeman joked that he was "very comfortable" sitting on nitroglycerine. The markets have coped well so far with the Bank of England"s postponement in down payment purchases, or quantitative easing, and were expecting the lapse to normality in a "smooth way". The group is counting on British banks to step in as vital buyers underneath new regulations.