IN THE UK the overall economic outlook still looks gloomy, so it is increasingly likely that we should expect some further action from the Bank of England at some stage this autumn.

There have been suggestions that this could involve unconventional forms of Quantitative Easing (QE) such as central bank purchases of private assets including corporate and securitised credit or the establishment of a direct lending institution funded by the Bank of England.

Meanwhile, there is still concern about what is happening to the Chinese economy as it endeavours to change from an historic focus on exports into the initial development of a consumer-led society. Although Chinese interest rates have been cut, there were disappointing export figures for July and in addition higher food and oil prices are likely to depress activity.

Second quarter corporate earnings figures have generally been satisfactory, if a little low key. Generally, consensus growth in earnings is estimated at some 5% for 2012, but due to the deteriorating prospects for world growth, it is likely that these will be downgraded for 2013.

At current prices the UK equity market appears fair value rather than outstandingly cheap, although it is quite disconcerting how all asset classes (fixed interest, equities, commodities, gold, etc.,) have tended to move in line with each other.

Generally the advice is still to concentrate on safe companies paying attractive dividends; the latest Capita Registrars report estimates an annual growth in dividends (excluding special payments) of 10%, which is extremely encouraging.

This cautious approach is based on the potential for disappointment should the Eurozone crisis worsen, China’s economic growth to slow further or the central banks not meet expectations for intervention.

: : Charles Sylvester is an investment adviser with Charles Stanley & Co in Ipswich