KEN Clarke yesterday said the pound was being hammered by fears Labour could win another term in government.
The shadow business secretary said markets were taking fright at polls suggesting Gordon Brown might hold onto office.
“It is only the prospect of a Conservative victory that has been holding up sterling,” Clarke said.
The daily YouGov poll for today’s Sun has the Conservative lead returned to five points. The Tories are on 38 per cent, down one, Labour up one on 33 per cent and the Liberal Democrats down one on 16 per cent.
Britain’s creditors were also counting on a Tory win, Clarke said, adding that spreads on UK sovereign debt already suggested bondholders think the country will soon lose its AAA rating.
“Movements in the markets just show how nervous our foreign investors are about the prospect of a Brown victory or a hung parliament,” he said.
Sterling fell again yesterday, although it managed to keep its head above the ten-month low it hit against the dollar on Monday. It bounced back from a session low of $1.4856 to finish at $1.49.
Chief secretary to the Treasury Liam Byrne accused the Tories of “undermining confidence in the British economy” for political gains.
Speaking alongside Clarke, shadow chancellor George Osborne poured cold water on Brown’s reputation for economic competence.
He accused the Prime Minister of destroying the pension system, trebling the national debt and destroying the UK’s competitiveness.