Bond fund managers forecast a bleak future for the UK as the markets continue punishing Greece for its debt problems.
Stewart Cowley, head of fixed income at Old Mutual Asset Managers, says the debt woes and fiscal deficits confronting Europe's southern states will take years to resolve.
As global bond markets continue their sell-off today, Cowley adds: "The cross hairs will turn then to the UK, and that is why the UK is getting hurt now, too."
However, he says if UK politicans attack UK public debt and deficits, a strong pound could be the surprise package of the year.
"The government has done hard things with the banks. There is good reason gilts could rally and the pound could rise, if people do the right thing," he adds.
Meanwhile, Peter Geikie-Cobb, co-manager of Thames River Capital's Global Bond fund, also has concerns about the UK and has instead been buying German bunds and US Treasuries.
He says: "I would expect sterling to take the strain of the debt burden as we devalue and deflate.
"There are good opportunities in bunds and the long end of the Treasuries market, but that is as far as it goes."
Peter Harvey, manager of Cazenove's Strategic Bond fund, says corporate tax hikes are one remedy the UK government might consider to tackle the country's problems.
He says: "There are debt-to-GDP concerns, and fiscal deficit concerns. Countries can normally chug along with one of them, but Greece and the UK are subject to double digit fiscal deficits and government debt to GDP ratios exceeding 100%."
Harvey says even this 100% threshhold is breached for the UK if private finance initiative debt "and other off-balance sheet debt" is taken into account.
Market pricing of bond protection suggests the UK government is more than twice as risky a debtor as pharmaceutical company GlaxoSmitKline, he warns.
Harvey says: "I look to be in companies with resilient earnings outside the UK, and manegeable borrowings such as AstraZeneca and GSK."
"They are pricey at the bond level, but if you are in a choppy year, it pays to stick at the pricey-but-quality end of the spectrum.
"People are reversing their risk decisions, and this will continue until there is a proper austerity plan for the UK."
