A top economist has predicted that there will be no double dip recession as widely tipped by many experts and reckons the corporate sector will lead the next phase of the recovery.

Keith Wade, chief economist at Schroders, who was visiting Bermuda last week to meet with clients and give a presentation on the outlook for the world economy at a conference held at the Royal Yacht Club.

He was joined by colleagues Chris Howells, an insurance actuary, who spoke on Solvency II requirements, and Jamie Stuttard, a bond fund manager, who talked from a funds prespective.

Mr. Wade, who also briefed investors on de/flation and an asset allocation strategy in his capacity on that committee, said that while the market had forecast a double dip, his belief was to the contrary.

”In terms of my message, I am in the more optimistic camp among economists,” he said.

”We have had the ‘V’ side of the recovery when companies realised that things weren’t quite as bad as expected.

>”The metric cycle came to an end about April this year when there was a slowing down in the economy.

”What we are looking for now is for things to pick up a little bit.”

Mr. Wade said that there was a lot of concern over whether the slow down would turn into a full recession, however he is confident that the signs are that it won’t.

He said that the key indicators were that the private sector had made a big adjustment in its saving rates versus a typical recession when it over extends itself and has to retrench.

In the case of the US and the UK, the saving rate had risen, while the corporate sector there had been a large increase in profitability, with many companies going from a deficit to a surplus.

”They are not in a position where they are going to suddenly have to cut back again,” he said.

”The corporate sector is in a better position to increase spending in capital expenditure and employment.

”We have seen an improvement in business with capital expenditure rising for three quarters in the US.

”Also orders for US goods have improved production sharply from pretty low levels.”

The fact that employment has not dropped as much as expected in a tough labour market with many jobs in areas such as construction unlikely to return, was reason to have faith in the sustainability of the economy, according to Mr. Wade.

But he is less bullish on interest rates, which he doesn’t foresee will start to climb again in the US and Europe for another year and when it does happen it won’t be by much.

”Whilst I do think there will be a recovery, I don’t think it will be terribly strong - about two or three percent,” he said.

”That is reflective of the fact that there is still a credit crunch and a risk of deflation in the economy.

”Core inflation has come down from two percent to one percent in the US and in Europe as well.

”It is a big issue in the UK with big fiscal tightening, VAT rises and spending cuts and the Bank of England is worried that the economy will take quite a big hit from that, while in the US policymakers are going to be reluctant about the tightening unless they are confident that the economy is on a strong footing and safe from deflation.”

In terms of asset allocation, Mr. Wade said that the return on yield was of the utmost importance for insurance companies and individuals taking on more risk, many of whom Schroders manage portfolios for. He views the equity market as an attractive proposition at the moment compared to bonds.

As far as emerging markets are concerned, Mr. Wade sees upward pressure on exchange rates in the likes of Asia, with China revaluing its rates.