Expert predictions for the UK market in 2011

Robert Talbut, chief investment officer, Royal London Asset Management: "Market wobbles will continue."

"I expect 2011 to be a further year on our move away from the 'great moderation', towards a higher degree of volatility in both growth and inflation. This continues to be a consequence of the unwinding of the excesses which led to the financial crisis and the fact that the global economy, while continuing to grow, is still vulnerable to some potential significant shocks.

"Prime among the risks are those surrounding sovereign debt and, just as we had several bouts of market wobbles in 2010 due to worries on the sustainability of the debt, I expect these concerns to return next year, and indeed for many years to come."

Gavin Oldham, chief executive of the Share Centre: "The FTSE 100 will break new ground."

"2011 will be the first for 12 years during which the FTSE 100 breaks into new ground, finishing the year at or above 6750.

"As businesses look forward to a leaner, more efficient post-credit crunch world, investment and earnings will rise on the back of continued low interest rates. However, the year will not be without serious volatility, particularly due to successive crises in the eurozone leading ultimately to some disorderly restructuring.

"A strong pound should also keep price inflation at bay, which is just as well as tax rises and higher unemployment will inevitably impact the standard of living. The retail and leisure sectors will therefore have another bad year. We favour Carillion, Centrica, Prudential and CPP.

"Our two favoured stocks for 2011 are Experian and, as our shortest term high-risk play, Churchill Mining."

Alex Breese, manager of the Neptune UK Special Situations fund: "Of all the developed countries, we are most optimistic for the UK."

"We believe the UK will exceed the pessimistic expectations for economic growth in 2011 because our core inflation level is higher than many other developed countries. This, in turn, is speeding up the deleveraging process.

"However, it is important to note that core inflation is not high enough to trigger interest rate increases, which would be problematic during a period of fiscal consolidation."

Jane Coffey, head of equities, Royal London Asset Management: "Equities will offer positive real returns."

"Over the medium term, it is likely that nominal GDP growth will be lower than it has been over the past couple of decades due to the necessity for consumers, banks and many governments in the developed markets to deleverage in the aftermath of the financial crisis.

"However, I continue to believe that the growth in China and the other major emerging markets will offer structural growth opportunities for developed market quoted companies and, given the attractive valuations of equities compared with their history and relative to bonds, I believe that equities will offer positive real returns and a growing income stream."

Julian Chillingworth, chief investment officer, Rathbone Unit Trust Management: "The euro could be a thorn in the side."

"The start of next year could see markets continue in volatile fashion as investors worry about G7 growth, and this will be characterised by the now familiar risk-on/risk-off trade. Emerging markets will continue to attract hot money, although we expect there will be a point when investors take stock and seek value elsewhere, for example, here in the UK.

"China will continue to be a crucial factor in swaying investor sentiment. Core European nations (Germany, France) will work very hard to uphold the euro, although the currency could prove more of a thorn in the side than not."

For more on what 2011 holds for investors read: Where should you invest in 2011?

This article was taken from Interactive Investor