Consumer spending outlook remains 'bleak'

UK GROWTH

The UK equity market has recently been volatile. The Government is committed to eradicating the structural budget deficit.

This is necessitating 20%-40% cuts in some departmental budgets with inevitable job cuts. This is clearly impacting consumer confidence. In addition, because of pay restraint generally, it is likely the UK consumer will suffer several years of real cuts in earnings. Given the consumer is already indebted compared to their incomes, the outlook for consumer spending remains bleak impacting the ability of swathes of domestically oriented companies to grow profits. This does not mean the market cannot make progress. Compared to the yield on cash of 0.5% and 3.4% on 10 year gilts, UK equit...