UK's global appeal offers hope for moribund economy

ON UK GROWTH

Despite the UK's domestic problems, earnings growth will continue to be healthy into 2011, writes Russell Investments' John Velis

The UK economy is moribund. So much of the growth generated in the past decade was dependant on the financial sector. House prices remain weak and households remain highly indebted and reluctant to spend. In the past, rising property values allowed people to lever up and consume. With home prices still dragging, the “wealth effect” is making people unable or unwilling to spend. Instead, they are paying off the debts incurred during the boom days. This will crimp activity for quarters to come. Credit growth in the UK economy is anaemic at best, especially for small and medium sized ...