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Is UK sovereign debt at risk?

After the release of today's UK trade data there has been a significant run on the pound and the UK currency saw its sharpest decline for over a week. There are growing concerns regarding the UK housing market, banking sector and today's trade figures have not added much confidence to the situation. Indeed talk of potential default of sovereign debt in Europe and around the world by various credit rating agencies is also another concern for investors to cope with at this difficult time.

It is worth remembering that the UK government is unlikely to default on sovereign debt but a widening trade gap, a weak economy and seemingly overdependence upon the Eurozone in the short term do not appear to be doing UK finances any favours. Economists have been crying out for a credible plan from the UK government to reduce the budget deficit, which is expected to hit £178 billion pounds for the current tax year, and now would seem an opportune moment to present this.

As we have mentioned on numerous occasions, the UK economy is at the moment taking two steps forward and one step back which is having a detrimental impact on consumer and investor confidence in the UK. We need to see the emergence of a solid positive trend regarding the UK economy before investors, analysts and economists move back onside and become more positive towards the UK as a whole.

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