RLAM upbeat on UK equity market despite lowering earnings forecast

Royal London has scaled back its UK earnings forecast, following the BP oil spill, though it believes UK equities look attractive over the longer term.

Following its most recent quarterly forecast meeting, RLAM's equities team predicts UK corporate earnings will grow by 19% in 2010, down from 23%. For next year its prediction is 8%. Head of equities Jane Coffey says the potential reduction in BP's earnings and dividends has had a big impact on its outlook for the UK. "Our forecasts are based on a trade weighted index and BP represents a large part of that so we needed to pare back our forecasts," she says. "Even with these changes, we are looking at a market which is trading at the low end of its price to book levels." Coffey d...