"Investors are beginning to see some light at the end of what has been a very long and jet-black tunnel"
- Nick Lewis, head of trading and market risk at Capital Spreads
Another sign British economy is on the right track appeared on Tuesday as survey showed mood among London fund managers and analysts improved significantly on the back of recent stronger-than-expected indicators. London-based Capital Spreads said that 82% of 200 respondents expect to nation's economy to build up steam over the next 12 months, up from 69% in the previous year. Moreover, 62% view the improvement as sustainable and not built on a housing market only. However, a cautious sign came from 30% of investors, who are saying the economy is a bubble based on a property boom, though they predict it to grow further for the foreseeable future. Meanwhile, only 6% expect the economy to deteriorate, down from 8%.
Despite brighter picture, Ben Broadbent from the Bank of England said markets may be a little excitable. During the last couple of months a bunch of upbeat reports forced analysts to get agitated about the prospect of rampant inflation. However, Broadbent noticed policymakers should put to one side the GDP figures and focus on the labour market. And even though it is a lagging indicator, it reflects the pressure on supply from higher demand and, therefore, leads to the consumer price pressure. Meanwhile, other measures of supply have become unreliable, according to Broadbent.
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