Gordon Brown last night backed away from plans for a recession-busting spending spree in next month's budget, after City investors delivered a stern message about the health of the public finances by shunning a sale of government debts for the first time since 2002, says The Guardian .
In New York to canvass support for a deal at next week's G20 London summit on a worldwide economic rescue package, the prime minister said he had no plans to add to the £20bn fiscal stimulus announced by Alistair Darling last autumn, saying there were other "effective and quicker ways" of kick-starting demand.
Back in London, investors sent shockwaves through financial markets by shunning a £1.75bn auction of government IOUs - gilts - amid mounting fears about the Treasury's ability to pay for its bank bailouts and fill the hole left by collapsing tax revenues. "This is a bit of a shot across the government's bows," said Jonathan Loynes, of Capital Economics.
US TREASURY SECRETARY TIM Geithner shocked global markets by revealing that Washington is "quite open" to Chinese proposals for the gradual development of a global reserve currency run by the International Monetary Fund, reports The Telegraph.
The dollar plunged instantly against the euro, yen, and sterling as the comments flashed across trading screens. David Bloom, currency chief at HSBC, said the apparent policy shift amounts to an earthquake in geo-finance.
"The mere fact that the US Treasury Secretary is even entertaining thoughts that the dollar may cease being the anchor of the global monetary system has caused consternation," he said.
Mr Geithner later qualified his remarks, insisting that the dollar would remain the "world's dominant reserve currency ... for a long period of time" but the seeds of doubt have been sown.
The markets appear baffled by the confused statements emanating from Washington. President Barack Obama told a new conference hours earlier that there was no threat to the reserve status of the dollar.
CANARY WHARF HAS REVEALED that it is in danger of going bust for a second time, according to The Times.
The plunging value of property, after various tenants have either collapsed or indicated they may move out, means there is a "material risk" that Songbird Estates, the Morgan Stanley-backed consortium that acquired most of the site in 2004, could be in breach of its banking covenants within a year.
The company's final results show that the market value of the property there slumped from £6.76 billion to £4.93 billion last year.
Songbird continues to meet all its financial covenants set out when the company was created and, using December 2008 property prices, it will meet its next covenant test in May, but further falls in the value of its assets could mean a subsequent breach.IFAonline
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Launching later in 2019
£80bn funds under calculation