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UK government suffers blow in bond market

The UK government has today suffered a severe blow after Bill Gross, the co-founder of bond fund giant Pimco, suggested that the UK was "a must avoid" for investors. To add further insult to injury he also claimed that the UK was "resting on a bed of nitroglycerine" due to the massive debt racked up over the last couple of years.

This comes on the day the UK economy officially moved out of recession with a disappointing 0.1% growth in the final quarter of 2009. Despite a more general upbeat feel to the UK economy over the last few months it would appear that many investors are still very wary of investing in the UK because of the growing budget deficit and the shaky nature of the so-called economic upturn. So will this impact upon the UK economy in the short to medium term?

In many ways it seems to be one step forward and two steps back with the UK economy at the moment and there are concerns that, economic performance aside, we could in fact "talk ourselves" back into recession. Consumer and business confidence are vital elements of any potentially economic upturn but as we have seen over the last few months, business leaders and consumers can be very fickle in their short-term outlooks.

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