Following his pre-budget speech the Chancellor's intention to borrow could affect current corporate bond and gilt prices. By announcing that he is going to borrow around £20bn next year, this will probably be in government bonds or gilts. It has already been announced that some will be in gilts.
This will create extra supply and could push down existing gilt and bond prices, thereby reducing the capital value of the holdings for people already invested. By pushing these prices down, returns from the equity markets could start to look more attractive, with people switching from gilts and bonds to equities.
Our opinion is that people invested in debt, such as gilts and corporate bonds should keep a close eye on Mr Brown's borrowing.
If you are unsure, seek advice. See our views on the pre-budget speech.