Record low gilt yields do not support UK 'safe haven' claims Simon Ward, chief economist at Henderson Global Investors, said Bank of England figures out yesterday "cast doubt on George Osborne's claims that record low yields represent a vote of confidence in the UK's fundamentals." UK non-bank investors such as pension funds and life insurers, the traditional buyers of gilts, cut their holdings by a record £23.1bn in November after a £16.7bn disposal in October, "reflecting presumably a judgement that yields were artificially and unsustainably low," Mr Ward said. The final buyers of gilts in November were foreign investors who had lost confidence in European markets, and the Bank through quantitative easing (QE). Mr Ward found that, since the start of 2009, UK non-bank investors have reduced their holdings by £6.1bn. By comparison, in the prior three years they bought £37.2bn. The slack has been picked up by the Bank, overseas investors, and UK lenders - "reflecting regulatory pressure to increase holdings of high-quality liquid assets." With conventional market drivers suppressed by price-insensitive official and foreign demand, the key determinants of when yields recover will be QE, regulatory policies, and eurozone stabilisation efforts. UK economic and fiscal trends are probably of second-order importance," Mr Ward said. Defenders of QE argue the trends demonstrate its success. By encouraging traditional holders of gilts to invest elsewhere, they are helping support the economy. Yesterday the Government sold £3.6bn of five-year debt at an average rate of 1.1pc - down from 1.13pc in December. Cheviot Asset Management's David Miller said: "The figures show foreign buyers view Britain as a safe haven and beacon of sanity in Europe."