UK economic growth to remain weak in 2006 but equities to stay supported - L&G
Wednesday, December 14, 2005 5:30:25 PM
afxpress.com
LONDON (AFX) - UK economic growth is set to remain weak going into 2006 but equities will remain supported over the coming months, according to fund managers Legal & General Investment Management
The UK economy has slowed significantly over the past 12 months and this "relatively weak background" is expected to continue into 2006, L&G said
Nevertheless, the economy will begin to recover by the second half of the year and by the end of 2006 the worst of the downturn should be over, though interest rates may need to be cut further in order to boost consumer spending
"The good news for the Monetary Policy Committee is that they have plenty of monetary policy ammunition, should the slowdown gather momentum, and consumers are still very interest rate sensitive," L&G said
UK equities are set to continue to perform well, however, boosted by a number of factors
Firstly, the apparent end of the US rate hiking cycle should give shares a boost, while UK equity valuations look good when compared with government bond yields. Additionally, earnings expectations are still positive going into 2006 |
