Overseas investors storm into UK gilts in search of safe haven

Overseas investors piled into UK gilts in February and March, buying up £28bn worth of assets - more than the inflow for the whole of 2009, according to the Bank of England.

Economists have suggested the sudden inflows are the result of insecurity over the contagion spreading from Greece throughout the eurozone. However, the European Commission (EC) has forecast Britain’s Budget deficit could actually overtake that of Greece this year to become the largest in the EU27. The Bank’s data shows foreign investors poured a record £27.6bn into the UK gilt market over the two months. Simon Ward, chief economist at Henderson, says: “Foreign investors were heavy buyers of gilts and Treasury bills in February and March, probably reflecting capital flight from Gre...