The UK will lag behind the US in 2010, but is still expected to be one of the better performing economies, finds Legal & General Investment Management (LGIM).

Debating whether the UK economy will recover earlier than others, James Carrick, economist at LGIM, believes that because of its greater flexibility of mortgage rates and the increased competitive advantage of the weaker pound, the UK will be one of the better performers over the next 12 months.

He says, ‘Since last spring, we have remained far more pessimistic about the outlook for UK economic growth than other economists. But as the global backdrop has deteriorated, that gap has now closed. We now find ourselves slightly more optimistic than consensus about the prospects for the UK economy.’

Carrick says the drivers of the improvement in LGIM's lead indicator suggests that ‘The catalysts for improvement can be divided into approximately four equal components. These are: falling mortgage rates, a combination of lower energy prices and a weaker pound, improvements in household balance sheets and finally, an expected recovery in the global economy.’

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