Poor economic growth and a re-run of the 2008 crisis are just some of the problems set to wreak havoc in 2012, Hermes latest economic outlook has warned.

The fund manager has predicted that a lack of effective tools and strategies to manage monetary issues this year will ultimately result in extremely poor policy rates and low bond yields. In order to help ensure inflation does not fall below target expectations, more quantitative easing (QE) is also expected.

Hermes has also warned that a continued loosening of the UK’s monetary and fiscal stance in 2012 will cause the pound to be vulnerable at a time when consumer price index (CPI) inflation is already more than twice the two per cent target.

Hermes chief economist Neil Williams said: “We still cannot revive consumers at a time when the true, QE-adjusted policy rate in the US is minus three per cent and minus one per cent in the UK.”

In addition, Williams stated that the euro will still remain in search of a government to govern the currency effectively and the eurozone will continue to pose plenty of problems for countries within the monetary union.

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