Britain needs negative interest rates to claw its way out of recession but will instead cut them to 1pc and flood the market with cash through Japanese-style "quantitative easing", according to Legal & General Investment Management.
The Telegraph reports the insurance giant expects the desperate measures will pull the UK out of its downward spiral in the third quarter of next year, by which time the economy will have contracted 3pc from peak to trough. House prices will fall another "10pc-15pc" by the end of the year but the FTSE 100 will recover to close at 4,800, L&G said in its Fundamentals briefing for 2009. Under its forecasting model for the UK economy, L&G calculates that interest rates need to be slashed to -1¼pc by the end of next year. As rates cannot fall below zero, L&G economist Tim Drayson expects the B...
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