2010 ‘game of two halves’ predicts Barclays

THE coming year will be one of two halves with the last six months proving more risky than the first, according to Barclays.

Its wealth economics report shows that consumers will be increasingly burdened by the rescue bill maing recovery slow and fragile.

Only modest growth is expected in developed economies and although growth will be more impressive in emerging economies it won’t significantly contribute to global growth.

The report warns that investors should be aware of the risks and be prepared for substantial reallocations within their portfolios shifting later in the year from overweight equities positions into safer asset classes such as bonds.

Michael Dicks, chief economist for Barclays, said: “We expect UK growth to resume in 2010 remaining slow but positive before picking up in 2011.

“Government spending cuts and cautious consumers remain the main source of weakness. CPI inflation will be volatile over the next year and will be so pronounced that the upper and lower boundaries of the inflation target will be approached.”

He continued: “Monetary and fiscal policies are both likely to tighten in the second half of 2010 following the general election.”