Buxton: UK in 'slugflation' but equities will grind higher

COMPANIES STRONG AMID 'SLUGFLATION'

Richard Buxton, the head of UK equities at Schroders, explains why the strength of the corporate sector will drive the UK recovery despite the threat of policy tightening and sluggish growth.

Investors have had plenty to worry about over the past few months. Be it geopolitical tensions in the Middle East, the re-emergence of sovereign debt concerns in Europe, or the still-live issue of a nuclear contamination threat in Japan, risk aversion has dominated the headlines. The worry does not end there, as in the medium term we may have to face interest rate tightening from the European Central Bank, while Fed policy remains loose. History suggests this is rarely an enjoyable environment for equities, so we may face some rocky moments. Closer to home, the path of UK rates remain...