Large caps should outperform

ON UK GROWTH

F&C's Peter Lees reveals his outlook for the troubled UK economy.

UK inflation expectations have fallen back despite the rise in the reported data. The Q2 Barclays survey reported one-year expectations fell to 3.3% from 4.2% in Q1 and five-year to 3% from 4.4%. The contrast between actual and expected inflation is mainly explained by the continuing weak economic data and the lack of upward wage pressure. Soft economic data put further pressure on the government to revise its austerity package. Despite this, the IMF gave an endorsement of the economic policy and said a programme of austerity was essential. The coalition government will seemingly not be ...