UK - Economic growth in the UK will be disappointingly slow and lacklustre over the coming year.
This not because of fears of a double-dip recession in the US or widespread deflation but because of excess indebtedness, according to Credit Suisse Asset Management.
The firm believes that debt associated problems are set to become increasingly poignant since Government policy to keep interest rates low, in a bid to stimulate growth, has encouraged borrowing to levels not seen since 1988.
The pattern of growth in consumer spending, supported by rising levels of debt is ultimately unsustainable, write CSAM analysts.
Companies are expected to remain defensive due to continuing pricing pressure and low volume growth. Consumer demand has kept growth positive, although pressure on profits is causing companies to start to cut costs, including jobs, while global excess capacity means that deflation is a risk.
Profits growth is also likely to be low, says CSAM, but may improve as the year progresses to realise a long-term 3-5% per annum.
“This, with the yield of the market at around 3.5% per annum suggests markets can trade sideways next year although sustainable recovery is unlikely until imbalances in the economy have been corrected.”
The market will remain volatile, as will confidence in the current policy. Downside will be limited by yield support for the market but upside will be constrained by fear of the consequences of policy failure.
Commerzbank has also predicted a challenging year ahead for the UK economy. In an end of year analysis, the German bank said that it expected buoyant consumer demand, a robust housing market and weak global demand to remain the main issues, although “the risks appear even more finely balanced than ever.”
Export growth and increased investment were anticipated over the next twelve months. Interest rates were also expected to rise by the second half of the year, as were public spending and borrowing.
The Pensions Regulator (TPR) has granted 11 master trusts extensions to apply for authorisation, as it confirms it has received 22 applications ahead of the 31 March deadline.
Aegon Master Trust, Fidelity Master Trust and Ensign have sent off their authorisation applications to The Pensions Regulator (TPR).
Self-administered pension funds spent £15bn on payments to pensioners in Q4 2018, but received just £12bn in contributions (net of refunds), Office for National Statistics (ONS) data reveals.
Aberdeen Standard Investments (ASI) and Gresham House are to team up to form a joint venture.