Economcis Weekly By Lloyds TSB

UK equity markets, along with many others around the world, have recovered strongly since their recent low in March 2009. Admittedly, the FTSE All-Share is still well below its 2007 all-time peak and, if one wants to go back further, below the previous peak recorded in 2000.

Are UK equities overvalued?

UK equity markets, along with many others around the world, have recovered strongly since their recent low in March 2009. Admittedly, the FTSE All-Share is still well below its 2007 all-time peak and, if one wants to go back further, below the previous peak recorded in 2000. However, the fact that UK economic recovery so far seems to be lagging that of some other major economies could lead to doubts about the sustainability of the rise in share prices. Here, the issue is that with economic recovery not yet assured, a fall in equity prices could hit business and consumer confidence and potentially slow the pace of economic recovery.

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