Luckraft: Eurozone crisis remains key risk to UK growth

ON UK INCOME

The economic background in the UK is expected to be sluggish at best in 2012.

The key risk to a benign outcome for UK growth remains the eurozone debt crisis, despite the long-term refinancing operation, recently announced by the European Central Bank, having reduced funding pressures on hard-pressed European banks. The costs of funding for peripheral eurozone countries may have fallen but we still have great scepticism regarding the creditworthiness of Greece. The austerity measures virtually guarantee further falls in the economy, worsening Greece’s fiscal position. Meanwhile, the collapse in bond yields mean pension fund deficits will be quite a lot higher t...