A new golden age for Britain

Article Abstract:

The British economy may be entering a new phase which is beneficial for stocks. Unemployment has dropped to 4.2% with wage inflation at 4.6% and the current account deficit at 1.9% of gross domestic product. Business investment has risen, and this is helped by low interest rates. Critics of the optimistic view argue that Britain invests less in research and development than the US, and the relatively high level of British unemployment benefit means that unemployment cannot fall as far as US unemployment without inflation becoming a problem.

Prices, Unemployment

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UK tries to emerge from Wall Street's shadow

Article Abstract:

The UK stock exchange is affected by events in the US, and UK prices are not likely to rise if US shares suffer a serious drop in price. Some analysts believe, however, that UK prices could drop less than those in the US or rise more rapidly than US shares if the US market undergoes a recovery. UK shares could be affected by the market for government securities which has performed well in 1st half 1996 but could face problems. There may be concern over monetary policy that could hit the UK government securities market.

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The year of interest rate surprises

Article Abstract:

The UK stock market has performed well in 1995, as has the market for government securities (gilts). UK interest rates were forecast to rise to 8% in 1995, but there were expectations that they would be lowered by Aug 1995. This shift in perception has helped financial markets. Bids were the result of companies having cash but being wary of investing due to slower economic growth. Share buybacks have also resulted from this phenomenon, and both trends have helped boost share prices.

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