The UK should expect a ‘short and sharp' recession in the near future and companies therefore need to revise their 2008 profit expectations down 5%, Resolution Asset Management (RAM) warns.
RAM CIO Peter Reid says the looming recession will not be avoided by aggressive interest rate cuts and corporate profits remain too optimistic. While Reid expects only a brief negative growth period, he says the economy is unlikely to meaningfully pick up until the middle of next year at the earliest. “The consensus is for UK profits to grow 7-8% in 2008, but we don’t think this will be the case, especially given that profit margins are starting from a very high level already,” he says. “In my view profit expectations need to come down closer to flat year-on-year to reflect what will be ...
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