Equities wake up to the deteriorating activity outlook

Growing concerns over the outlook for the economy have started to take their toll on equity markets. The 10% fall in the FTSE 100 largely reflects global issues. Nonetheless, it took equity prices back in line with other asset prices, such as bonds. The fall in the FTSE is unlikely on its own to have much of an impact on the wider economy. However, combined with falling house prices and rising inflation, it adds to the pressure on consumers’ finances and is likely to contribute to a marked slowdown in GDP growth both this year and next.