Telegraph columnist Roger Bootle gave his thoughts about the outlook for the UK economy in 2011 and the vital role that sterling can play in a recovery.

The specialist expects Britain’s economic growth to be very weak. Bootle supports massive budget cuts conducted by the government, but thinks that austerity measures are going to affect the country’s economy in a very brutal way.

Never the less, says the financial journalist, there seems to be no alternative for the country that wants to narrow its huge budget shortfall. British consumers will have to face the shortage of mortgage credits and high taxes. However, the current situation doesn’t look like the recessions that were seen in the UK earlier as the companies aren’t shaken much. “We may see corporate investment recovering a bit,” notes Bootle.

If there will be a severe financial crisis in the euro zone, it’s quite possible that euro will weaken significantly both against dollar and pound. Bootle believes that the lowest point of sterling hit in the very financial crisis has now passed. The economist is more worried about that upside risk that will affect the country’s exports regarded currently as the main economic driver.



Chart. Daily EUR/GBP

More info about FBS