Subdued growth may persist for years

The UK market has rallied strongly from the lows of mid-March, led by cyclical mid and small-cap stocks, but we believe subdued global growth could persist for some years. This is due to overcapacity in many industries holding back corporate investment and high US and UK debt, which has been restricting the ability of the consumer to respond to the stimulus of even lower interest rates. As a result, expectations of a rapid economic and profit recovery may not be met. Many companies reporting this year have achieved earnings growth through cost savings, paying down debt or share buyback...