Smithers: Stick to Cash

(FT.com) Economic commentator Andrew Smithers has a dim view of growth prospects for the eurozone, UK and Japan but overall, he takes an unusually mild approach in his latest world market report to clients.In short, says Smithers:

• The unexpected surge in worldwide inflation shows that output has been running well above its equilibrium level. Growth must therefore slow to well below trend rates if inflation is to fall back.

• Below trend growth will mean lower profits in terms of national accounts. Larger falls are likely in company accounts, as the profits booked by the change from historic cost to current value accounting turn to losses.

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