Downside risks remain for UK bonds

The UK economy struggled for much of 2005 and gross domestic product for the year as a whole is like...

The UK economy struggled for much of 2005 and gross domestic product for the year as a whole is likely to have been in the region of 1.75%. As typically happens, manufacturing and industrial production dragged overall growth lower, but in 2005 the consumer also provided little support. Despite this, the monetary policy committee (MPC) only cut rates once to 4.5%. One reason for this was that inflation remained above the 2% target. However, since the first cut in rates back in August, there have been some signs of stabilisation in the housing market with a knock-on effect in consumer s...