New year brings significant changes

Equity returns in Europe have proved to be a huge disappointment in 2001, with declines in excess of 20%, in sterling terms, registered for the major indices so far for the year. The economic fall-out from the US and the subsequent negative impact on corporate earnings has forced the world's monetary authorities, led by the US Federal Reserve, to cut interest rates aggressively and relax fiscal policy significantly. The question now for investors is whether this monetary and fiscal stimulus will have the desired economic effect and provide a base for recovery next year. With the ma...