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Fears over rescue plans as gilts fail to sell

Low demand for the £1.75bn gilts issued by the Treasury in a bid to raise more money has sparked fears that Prime Minister Gordon Brown’s rescue plan may fail.

In previous years, gilts have attracted a demand of double the amount supplied.

But this latest tranche have failed to all sell with 7 per cent still remaining which analysts say is a worrying sign for the future of public finances.

Analysts said Britain could be facing a situation where the debt burden became unsustainable and said the only way to avoid this was to make major cuts in future public spending.

Fingers were pointed at the Bank of England’s quantitative easing strategy as part of the reason why gilt yields have shifted downwards recently, which may explain why buyers cannot be found for all the gilts.

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