government

As we leave behind what was possibly the most dramatic year on record for the financial markets, what should be the take-outs for 2010?

In the first week of December, Investment Week reported that M&G's Jim Leaviss believed there was a substantial chance there would be a downgrade by ratings agencies of UK government debt if there was no attempt to tackle the budget deficit.

Corporate bonds posted a strong performance in 2009 (c. 15%), more than recovering the losses of 2008, and have dramatically outperformed equities over the last decade.

Prospects for the global economy remain unclear. Despite a positive response to stabilisation measures introduced by G20 governments, the challenge now is how to exit from the enormous stimulus packages while maintaining recovery

This week's Conjecture panel concludes there are decent returns to be had in equities over the next 12 months and the upswing we are witnessing among developed and emerging economies is synchronised and solid

In recent months, the corporate bond market has been firmly in positive territory. Relevant indices have risen to their highest levels of 2009.

London's financial community feels it is fighting a war on two fronts: the prospect of being hamstrung by pending EU measures and suffering targeted attacks from the government at home.

Over the course of the year, the Japanese stock market has continued to rise from its March low point, helped by a general improvement in investors' risk appetite and the release of more positive economic data.

Government interference in capital markets has never been so great in the post-war era and the contradictions within asset values are becoming ever more apparent.

The consensus view for the UK's economic outlook in recent months has been that while the worst was over, progress would be slow and consumers were in line to struggle in 2010 burdened with high unemployment and rising taxes.