Continued weakness expected in UK economy

Equity markets have deteri-orated over the past year as tighter global monetary policy and rising defaults undermined credit markets. However, recent action taken by the Federal Reserve appears to have stabilised the situation. Not only has the Fed cut interest rates aggressively, but it has also engineered a takeover for struggling investment bank Bear Stearns. Recent economic data have been weak in absolute terms in the US, but not as weak as expected, suggesting that a recession is widely expected now. Moreover, in the coming months, the US economy should benefit from tax cuts. If th...