Standard Life Investment Managers are encouraged by fresh signs that the US economy make have found a bottom which would be good news for investors. It says the chances of a rebound have certainly increased with interest rates some 2.75 per cent lower than at the beginning of the year and tax cuts set to kick in later this summer. In Europe it looks slightly different.

The economy is slowing much quicker than expected on the back of the US and global economic slowdown, it says. The tax cuts last year and this year in Germany, France and Italy did not lead to further consumption as people are struggling with high prices at the petrol pump and the fruit and vegetables counter, it points out.

Unemployment is also starting to rise again. At the same time, it seems much more difficult in Europe to adjust to the environment after the high-tech and telecommunications bubble burst, according to Standard Life.

The flexible structure of the US economy means it can recover much quicker than the European economy with all its rigid labour and goods markets, it adds. The US economy is also much more interest rate sensitive than some of the bigger European economies.