With world markets mired in a severe synchronised slowdown, the long-term outlook for U.K. and continental European equities remains uncertain. While capital markets may take short-term comfort in further interest rate cuts by the European Central Bank and the Bank of England, extra liquidity and lower borrowing costs may not be enough to encourage nervous corporations and consumers to invest and spend. The current crisis may force cautious policymakers to cast aside fears about inflation and pursue more aggressive monetary and fiscal easing.