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MARKETS & DATA – Sunny outlook for global growth.

Equity markets have made a positive start to the second quarter as results improve and interest rates continue to fall. As a result, in both the US and the UK, the outlook for global economic growth is better than expected. UK STOCKMARKET The All-Share Index has pushed well ahead of the levels reached last July, supported by both technical and fundamental factors. Retail demand in the final PEP season has been strong and interest rates have been cut again. Better-than-expected results for 1998 and the increasing likelihood of a soft landing for the economy have led some forecasters to increase their forecasts for this year’s profits growth. OVERSEAS EQUITIES The US market continued to hit new highs in April as earlier fears about the possibility of an interest rate rise receded. Despite some disappointments, for example from Coca-Cola and Compaq, profit warnings were less of a feature ahead of first quarter earnings reports than they have been for some time. With the economy showing little sign of slowing, commentators are, as in the UK, becoming more positive on the outlook for profits growth. INTEREST RATES The European Central Bank has proved to be more flexible than its detractors had feared. Speculation about the possibility of a rate cut had increased in advance of the Bank’s April meeting, but 0.5% was bigger than generally expected. While concerns about the state of the European economy linger in some quarters, the consensus is now that euro interest rates have reached a trough. SURVEYOR: BUBBLE BABBLE? BOOM BIBLE! No investor relations, no comment Proportion of directors rating communication with investors as “important” 89% Ditto, who speak to them on a regular basis 7% Ditto, who speak to customers regularly 45% Source: Hay Management Consultants Tracking down entrepreneurs? Proportion of UK pension fund assets which were index-tracking, April 1998 16% Ditto, April 1999 22% Average proportion of US funds invested in venture capital 6.9% Ditto, UK funds 0.9% Source: William M Mercer; BVCA Fraud gives you more Cost to UK business of serious (£100,000+) frauds, 1997 £121m Ditto, 1998 £279m Cost to government of serious fraud (1998: 18 cases) £21m Cost to investors (1998: 12 cases) £237m Total cost of serious fraud, 1989 to 1998 £3.8bn Source: KPMG Cashiers cashed in Proportion of adults relying on ATMs for sole source of cash 60% Estimated number of high street branches to close by 2005 (out of 11,000) 3,600 Proportion of UK consumers prepared to buy financial services over the Internet 31% Source: Polaroid; Deloitte Consulting; Reuters Recession, er, soft-landing watch Regions of mainland UK expressing lower consumer confidence, Q1 1999 0 Industry sectors expressing lower business confidence 0 Proportion of marketing managers who expect to hit or exceed 1999 sales targets 63% Proportion of CEOs (worldwide) optimistic about growth 80% Source: Business Strategies Ltd; Dun & Bradstreet; Chartered Institute of Marketing; PwC Better to arrive than to travel Proportion of directors whose work suffers due to rigours of travel 56% Proportion of global corporate operating costs related to travel 7% Proportion of directors who don’t take their briefcase on overnight trips 6% Proportion of FDs who take a “good book” with them on trips 25% Source: Barclaycard; American Express; Cellnet Parochial? Us? Proportion of Asian CEOs who think Asia has the best regional growth opportunities over the next 3 years 66% Ditto European CEOs about Europe 63% Ditto North American CEOs about North America 75% Ditto Latin American CEOs about Latin America 63% Source: PricewaterhouseCoopers The wages of sin are £3.60 an hour Proportion of UK employers who agree, in principle, with minimum wage 87% Expected number of jobs to be lost in three years due to minimum wage 80,000 Proportion of businesses expecting “no impact” from minimum wage 52% Source: Reed Personnel; Business Strategies Ltd; 1999 Enterpriser Survey EXCHANGE RATES After a fall of about 10% this year, the euro has stabilised between 1.07 and 1.08 against the US dollar. April’s rate cut is being viewed as sufficient to arrest recent economic weakness in Continental Europe and to contribute to a modest revival in growth in the second half of the year. Market data supplied by Britannia Asset Management Ltd. Tel. (0141) 248 2000. Expressions of opinion contained within this document are subject to change. Britannia Asset Management Ltd is the holding company of Britannia Investment Managers Ltd (Regulated by IMRO). Yield curves: Bloomberg; others: Primark Datastream.

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