Roger Bootle, UK
economic adviser to Deloitte, believes that interest rates won't go up
significantly until 2012.
If this is true,
and Bootle's standing as one of the City's top economists suggests it could very
well be, then banks, businesses and investors can look forward to some fruitful
years ahead.
The low interest
rate means that banks can borrow cheaply and lend expensively to rebuild their
balance sheets which, in turn, means that businesses will find it easier to
access finance.
For savers and
investors, low rates and high yields make for great returns. The typical net
yield on an income portfolio is five per cent - and Bootle's prediction means
that income investors can expect to see much higher yields from income funds
than savings accounts for the foreseeable future.
But while we may
be seeing the sure fire signs of recovery, our culture of spending may never be
the same again. Poundland has announced that it will quintuple its stores and
this could well represent a change in values for the British consumer, with
value being key.
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