UK recovery will be 'long and fragile' - F&C's Scott

F&C's Ted Scott says the UK has experienced the worst of the current recession, but warns a recovery will be "long and fragile".

Scott, director of UK strategy, says there is a greater risk of inflation than deflation but argues it will be well into 2010 before it becomes apparent. He says a prolonged period of deflation would have been a disaster for the market. According to Scott, bond markets now indicate there will be modest inflation going forward, and this was a major factor driving equities up during the second quarter. He argues that de-leveraging will act as a brake on recovery. When the economy does start to recover, the Government will reduce its borrowing by cutting back on spending and raising taxe...