(12PressRelease.com) “Nikkei Financialâ€- Britain is unlikely to default on its debt but inflation will soar when QE returns.
Analysts at Nikkei Financial have told clients that the United Kingdom is highly unlikely to default on its debt obligations but future high inflation is almost a certainty.
Head of Corporate Trading at Nikkei Financial, David Thomas, said that Britain‘s situation was significantly different from that of Greece. Should the markets demand yields from the UK that are too high as they did with Greece the government will have the option of instructing the Bank of England to restart its quantitative easing program as a means of simply creating the money they need to provide services.
Mr. Thomas sounded a note of caution, however, when he added that this would result in the return of inflation numbers not seen since the 1970s which could do lasting damage to the quality of life for the population in terms of high prices for imported goods and materials.
Nikkei Financial remain concerned at the lack of a credible deficit-reduction plan by any of the three political parties contesting the country‘s general election and believe the scale of public spending cuts and taxation increases will be particularly unpalatable to the British electorate.
With some commentators calling for increases in tax of up to 6p in the pound, “Nikkei Financial†believes it is likely that the winning party or coalition will opt for a policy that partly monetizes the deficit.