Uk rate cut confirms rapidly deteriorating economic outlook, says f&c's scott

"This week's IMF Global Financial stableness Report and data released by the Halifax, revealing the biggest monthly fall in UK house terms since 1992, has clearly helped inject a sense of urgency into the Monetary Policy commission's thought. The MPC, which has been carefully balancing concerns about rising prices against a lag in growing, is clearly very worried about the economic outlook and it is also possible they know something that the rest of us do not know," said Scott.

"surely the premier's recent forecasts appear to have been way too optimistic," he added.

 UK rate cut confirms rapidly deteriorating economic mentality,house terms down a staggering 2.5% in March, a drying up of first-time home buyers, rising oil and food terms and an all time low in the Sterling / Euro exchange rate ahead of the summertime holiday season.

"Disposable income is truly being squeezed and in my view a recession is becoming increasingly probably. This is being mirrored in the exchange rate," added Scott.

"Today's net income warning from Dixon's is yet further evidence of toughening conditions on United Kingdom's high streets. For some time we have positioned the F&C UK growing & Income Fund very underweight domestic consumer-facing stocks and we will continue to do so. We also remain underweight domestic help banks, although some exposure is necessity to harness yield."

"Thankfully," Scott concluded, "the UK marketplace contains a large figure of stocks with significant overseas net income, particularly in the FTSE 100 and the trade goods sector, so we are able to find opportunities that are relatively less exposed to the deteriorating UK economy while staying within the remit of the Fund."