Good News !!

The UK economy emerged from its 18-month recession at a faster pace than expected, figures released by the Office for National Statistics (ONS) show.

Britain's gross domestic product (GDP) grew 0.3% in the final three months of 2009, up from its first estimate of 0.1% and stronger than the 0.2% revision made by City economists.

It follows better-than-expected showings from most parts of the economy.
The services sector, the biggest part of the economy, grew 0.5% instead of the 0.1% initially estimated; manufacturing was also revised upward, with industrial production growing 0.4% instead of 0.1%. Elsewhere, Government spending increased 1.2%.

There was further bad news for savers last week after figures released from the Office for National Statistics showed that inflation had increased to 3.5pc. The rise means that in order to beat both tax and inflation, standard rate tax payers need to find a savings account earning 4.38pc a year, while higher rate tax payers need to earn 5.83pc.

The only savings products on the market at present that will achieve such a level are selected regular ones, where savers can invest only a restricted amount per month, and fixed rate bonds, but then only if you're prepared to lock your money away for at least two years.

Meanwhile, the situation is unlikely to get much better anytime soon for savers. Mervyn King, the Governor of the Bank of England, warned that the bank base rate was likely to remain at its all time low of 0.50% for the rest of the year and into 2011, leaving savers with little chance of any significant increase in the rate of interest they can earn on their money.

As providers increasingly compete for saver's tax free ISA allowances, savers can at least expect these rates to increase in the coming weeks.

However to really track down accelerated returns investors might have to turn to more traditional investment routes such as fixed interest, corporate bond or even equities. I list below the most recent sector performance which gives an indication of what has been going within investment sectors of late. When studying the figures please remember past performance cannot be used as a guide for future perofrmance.

Sector Performance – Cumulative

Sector 3 months % 6 months % 1 year %

£ Corporate Bond 2.33 12.08 22.44
Absolute Return 0.71 4.63 8.48
Europe excl. UK -1.38 12.90 21.34
Global Bonds 0.22 7.46 6.93
Global Emerging Markets 1.07 13.47 56.75
Global Growth 1.86 12.73 22.89
Japan 4.79 6.28 3.14
North America 4.13 13.56 17.56
Property 1.92 13.97 17.83
UK All Companies 2.59 16.54 31.38
UK Equity Income 2.54 16.02 25.72
UK Equity Inc & Growth 2.91 15.36 22.82
UK Index Linked Gilts -1.32 6.67 7.49
UK Smaller Companies 1.51 21.24 51.76

Source: Financial Express
29 January 2010