Soros says failed bond auction "a blip"

LONDON (Reuters) - George Soros said on Saturday that the country's first failed government bond auction since 2002 was just "a blip" but it was conceivable that Britain might end up seeking help from the International Monetary Fund (IMF).

The financier told the Times he agreed with Bank of England Governor Mervyn King that rising British debt was a problem, adding that a glut of borrowing could scare away investors.

"I think it will have an effect, yes, it is a matter of worry because effectively the hole in the banking system is replaced by increasing the national debt," he said.

King told a parliamentary committee on Tuesday that the government's burgeoning budget deficit meant it would have to be cautious about any new fiscal stimulus package to boost the economy.

The following day the sale of 40-year government bonds failed after there were too few bids for the 1.75 billion pounds of gilts on offer.

Soros echoed the Treasury's assertion that the failure was an isolated incident and not part of a broader drop in demand.

"That was a blip," he said. But asked whether Britain could end up going cap in hand to the IMF, he said it was a possibility.

"It's conceivable. You have a problem that the banking system is bigger than the economy ... so for Britain to absorb it alone would really pile up the debt ... if the banking system continued to collapse, it's a possibility but it's not a likelihood," he said.

Britain last sought IMF help in 1976 in a move that destroyed the Labour party's economic reputation for a generation.