Critical hours ahead for the UK economy
There is no doubt that the next 48 hours will be critical for the UK economy as we await confirmation of the new government. There is intense speculation that bond traders are looking to attack UK national debt bonds in the short-term as concerns continue to grow regarding the budget deficit and the UK national debt. There will be some volatility in the UK bond market, no matter who wins, with the market set to open at 1 AM on Friday morning for the first time in history.
The direction of the bond market immediately after the election result is announced will determine whether UK debt will be cheaper or more expensive to finance in the medium to longer term. We have seen headlines today suggesting that UK national debts and the budget deficit are actually worse than the Greek problem which does not give confidence to investors in the UK.
Whether or not markets have become more nervous because of the Greek problem, or indeed whether the UK situation is worsening in the short-term is open to debate, but the UK seems to be the focal point of investors concerns. Those who feel that Friday morning will herald a bright new era for the UK economy may well have to put that particular thought on hold.
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