M&G head of retail fixed interest Jim Leaviss believes the US will lose its AAA credit rating, but not in 2011.
Leaviss says France is currently “the AAA economy closest to a downgrade”, while the UK is also under pressure.
Leaviss says that the worry is that economic growth will not make the inroads that some of the central banks want to see but says a double-dip recession is unlikely in any of the three leading economies.
He says the UK will see “a renewed bout of quantitative easing” even though inflation is currently above its target level. Inflation currently stands at 3.3 per cent, well ahead of the Bank of England’s 2 per cent target.
He says:”We believe that central bank thinking in the UK and Europe has moved away from pure inflation-targeting to more of a ’dual-mandate’, like the Federal Reserve, of full-employment and price stability,
“Central banks and governments are throwing everything they have in their monetary and fiscal policy weaponry to generate a self-sustaining economic recovery.”