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Allianz Global (Could Britain Out-Greece Greece?)

Press Release: March 04, 2010

The current government and the opposition to table plans for the reduction of the nations fiscal deficit.

The ItaliAllianz Global : The United Kingdom faces a similar problem to that of Greece as pressure mounts on an-based private fund believes that political wrangling in the run up to Britains forthcoming general election in which Gordon Brown will be seeking re-election to office is seeing both main parties reluctant to commit to telling the electorate of the magnitude of austerity required to reduce the public debt.

Allianz Global analysts say that both parties are unwilling to run campaigns in which they tell the voters that they intend to raise taxes and cut public services.

Although many economists suggest that Britain has an advantage that Greece does not insofar as its ability to print more money and inflate its way out of debt, Allianz Global believes that this ability would more than likely backfire by forcing up the price of the goods which Britain imports including oil. This would drive up inflation and, consequently, result in higher yields being demanded by investors to compensate for the devaluation of the currency.

It would also force interest rates up which could stifle recovery and further exacerbate the problems facing the countrys real estate market.

Notes to editors

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