LONDON (AP) — The pound sank to a new record low against the euro yesterday as the government debt's burden hit its highest level in almost a quarter century and a leading Bank of England rate-setter hinted that interest rates could be cut to zero.

By late morning London time, the pound continued to head towards parity with the euro, with the European single currency up 2.5 percent to 95.56 pence ($1.47). That was the first time it had broken through the 95 pence barrier since the euro was launched in 1999.

Analysts said the latest bout of selling was stoked by further grim data and the suggestion from Charlie Bean, deputy governor at the Bank, that zero interest rates are a "possibility".

Rates are currently at 2.0 percent, having been slashed in recent months from 5.0 percent in early October.

In an interview with the Financial Times Bean also hinted that the banks may need another capital injection to get them to start lending to consumers and households again. In October, the government announced a bank recapitalisation plan to bail the banks out amid the mounting financial crisis.

"It may well turn out that further capital injections are required," he said. "I certainly wouldn't rule that out. It may well be necessary if the banks feel they're going to feel comfortable about continuing to lend."

Any new capital injections into the banks will put further pressure on the government's finances, which are already in a fairly parlous state.

The Office for National Statistics revealed earlier that public sector net borrowing, the government's preferred measure of the public finances, rose to £16 billion ($24.8 billion) in November amid rising unemployment and social benefits and lower tax receipts. November's deficit was the biggest since monthly records began in 1993.

The increase in the deficit pushed net debt up to £650 billion, or 44.2 percent of annual gross domestic product. The debt ratio was last higher in March 1985.

"The public finances are in a dire state," said Hetal Mehta, senior economic advisor to the Ernst & Young ITEM Club.

The gloom generated by the public finance data was not lifted by the surprising news that retail sales rose 0.3 percent from October to November.

Analysts were anticipating a 0.6 percent decline after a raft of bad anecdotal and survey evidence during the month.

The statistics office said the rise was driven by an increase at household goods stores and non-store retail and repair shops. Internet sales were strong too.

Vicky Redwood, economist at Capital Economics, said discounting may be keeping consumers spending but thinks the official figures are "hard to take seriously" given that other measures of retail spending suggest there has been a retrenchment. The official figures have been criticized in recent months for being too upbeat.

"We still think that Christmas will be pretty awful for retailers and that things will get even worse next year," Redwood said.