'Economic relapse' predicted for 2010

An analyst has claimed that investors expecting to see unchecked economic growth next year could be disappointed.

Tim Drayson, economist at Legal & General Investment Management, said that the encouraging results of recent business surveys may paint an inaccurate picture of the global economy.

He urged investors to be cautious about their wealth management for the time being, particularly where US markets are concerned.

’Once the initial effects of government stimulus wear off, the US and UK economy may suffer a relapse in growth,’ Mr Drayson commented.

’While the stage is set for a global economic comeback, there is scope for disappointment in 2010, particularly in the US.’

The economist also predicted that central banks will decide to keep interest rates ’on hold’ for an extended period, potentially until 2011.

Mervyn King, the governor of the Bank of England, told the Treasury Select Committee this week that ’headwinds’ such as the state of the banking system and debt levels are likely to slow the pace of economic recovery in the UK.
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