UK interest rates may drop by three quarters of a percent in 2008, according to Brewin Dolphin, the UK’s largest independent provider of private client investment management and financial planning services.

The company believes that threats to the economy could lead the Bank of England to cut rates as many as three times, in a move that would be welcomed by homeowners and businesses.

Myles Palmer, divisional director at Brewin Dolphin’s Marlborough office said: “Whilst no-one can completely predict the state of the economy throughout the year ahead, there are more worrying indicators than reassuring ones – a situation that is likely to lead to interest rate cuts.” Given the current climate, Brewin Dolphin predicts that rates could come down to 4.75 per cent by the end of the 2008.

When it comes to the equity market, Brewin Dolphin is cautious but optimistic about the outlook for next year.

Mike Lenhoff, chief strategist at Brewin Dolphin said: “I view this period of consolidation, following four years of a bull market, as the transition phase to the next stage of the bull market. I expect the S&P 500 to reach all-time highs and to end 2008 somewhere around 1650. If Wall Street goes my way later next year, then I think the FTSE 100, whose large international blue chips have more to do with the prospects for the global economy than the UK, could be up around 7200 by year-end 2008.”

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