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Sterling tumbles after UK debt revealed

Thu 22th Jul 2010

Expatriates who keep their savings or pension in sterling could be hit by the plunging rate of the British currency as UK public borrowing experiences a sharp, unexpected rise.

According to Travelex Global Business Payments, sterling fell to a session low against the euro this morning (July 21st) after the Office for National Statistics announced that public sector net debt rose to 14.5 billion - or 63.9 per cent of gross domestic product.

The pound also fell 0.4 per cent against the US dollar, to $1.5219.

Travelex's European market analyst Tiffany Burk commented that this is the largest public sector net cash requirement for June since records began in 1984.

"While the data is slightly backward looking, as Labour's policy measures are still in place, it does highlight how dependent the government has been on borrowing to date and is a very discouraging figure" she noted.

However, expatriates who are reliant on favourable sterling exchanges for their retirement or other annual income may be pleased to learn that Ms Burk believes the pound will recover from its current low.

British chancellor George Osborne last month set out proposals for swingeing cuts in public spending and introduced a VAT hike due to come into effect from next year.

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