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UK will avoid double-dip but expect more QE

The UK economy will avoid a double dip recession but a new round of quantitative easing could be on the cards, according to fund managers.

A Skandia Investment Group (SIG) survey polling ten leading UK equity managers including Schroders' Richard Buxton and AXA Framlington's Nigel Thomas reveals a united belief the country will not fall back into recession - although growth will be slow or non-existent.

The fact the UK economy will "bump along" in a slow or no-growth environment could jeopardise the coalition government's recovery plan and perhaps necessitate further quantitative easing next year.

"We do not expect the UK to fall back into recession over the next few months," said Colin McLean at SVM.

"QE should keep growth positive, but we do not expect overall UK growth to exceed 1% in 2012 and QE will be needed again in twelve months' time."

Buxton added: "We do not believe that the UK economy is going to sink back into a significant recession in the coming months, although we do think that the environment will remain one of near zero/sluggish growth."

SIG portfolio manager Ryan Hughes said there appears to be consensus the UK economy will avoid the dreaded double-dip.

"However, it is also clear that this recovery will be slow and painful with a very real chance that the economy will need further injections of quantitative easing in 2012," he said.

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