“Sakura Financial Group†says a good, old-fashioned sterling crisis is a distinct possibility as Britain overdoses on debt.
Asia-based asset management firm, Sakura Financial Group apparently believe that the UK faces what it calls a “good, old fashioned sterling crisis†as the nation borrows heavily to kick-start its beleaguered economy.
Britain remains the only major, developed economy still mired in recession despite the Bank of England‘s herculean efforts to inject capital into the banking system via quantitative easing and this, say “Sakura Financial Group†sources, is largely to blame for attracting the unwelcome attention from Moody‘s and Standard & Poor‘s, the two main credit ratings agencies.
The firm‘s analysts believe the prospect of a hung parliament in the general elections next year increased the possibility of a currency crisis that could cripple Britain‘s efforts to recover from what is the longest recession since the second world war.
Sterling has fallen precipitously against all its major trading partners since 2007. It has lost some 30% against the US dollar which, according to Sakura Financial Group analysts, is hardly a model currency.
The firm maintains that unless Britain sets out concrete plans to addresses its deficits and rein in its public borrowing, the country may suffer the ignominy of losing its AAA sovereign credit rating. Such an occurrence would see Britain join Spain, Ireland, Greece and other European neighbors in the 2nd division of sovereign debt.
Britain has spent proportionally more than any other developed nation to bail out its banking system and will have to borrow £200bn every year for at least 3 years to pay for it.