Pimco: UK gilts are a ticking timebomb

THE manager of the world’s largest bond fund has urged investors to shun UK gilts, describing them as “resting on a bed of nitroglycerine”.

The intervention by Bill Gross, co-founder of Californian fixed income house Pimco, came as a heavy blow to chancellor Alistair Darling on the day official figures confirmed Britain emerged from recession by a sliver.

“The UK is a must to avoid,” Gross wrote in a note. “High debt with the potential to devalue its currency present high risks for bond investors.”

A chart indicated the UK was in Pimco’s “ring of fire”, a group of the most vulnerable countries. Gross said the UK was at particular risk because it had “a finance-orientated economy – exposed like London to the cold dark winter nights of deleveraging”.