Beware the consensus view within reluctantly recovering UK economy

As the year end looms, investor focus has turned to the outlook for 2010.

The market has rallied significantly from the lows in March, driven by enormous liquidity, positive earnings surprises and some signs of a macro recovery. Of late, the sustainability of this rally has been called into question as the challenges for next year are considered. The Bank of England announced recently a further increase in quantitative easing stimulus to £200bn. While the liquidity tap remains on, and in the UK it may be for quite some time, there is likely to be support for equities. However, central bank “exit strategies” are now being discussed and the timing and pace of th...