According to Sir Mervyn King, the Governor of the Bank of England, the UK is on a ‘zigzag’ path back to growth. Strong economic data for consumption figures surprisingly contrasted cautiousness in the outlook going forward, but the Monetary Policy Committee acknowledged that the economy remains fragile.
Following its early and aggressive response to the financial crisis, the US has averted disaster and is going from strength to strength. However, consumer borrowing is a key risk to watch and, following a 0.3% fall in the transport sector in the last month, there are concerns of a potential slowdown in the industry.
The Eurozone is showing signs of stabilisation but the Greek tragedy continues and the bailout remains top of the news this month. Despite succeeding in securing €130 billion in additional aid, a report from the International Monetary Fund (IMF) raised doubts over whether Greece can meet its targets.
Emerging market funds saw eight weeks of consecutive inflows (to 22 February 2012), with investors adding $20.7 billion to emerging market equity funds so far this year and central banks looking to diversify away from European holdings. However, the region remains at risk of economic fallout from a worsening of the Eurozone crisis. Long-term demographics continue to look attractive, although growth is softening in the short term.
Equity markets reached seven-month highs, with the S&P in the US soaring to levels not seen since June 2008. With significant risks remaining in the Eurozone, we await either a correction or the resolution of key issues to gain enough confidence to add more risk to the table.
Demand for central London office space has given support to the property market and the sector looks to continue to benefit from foreign investment, although judged on a building-by-building basis.