The UK will grow at a much faster pace in 2012 than is currently expected, according to Cazenove’s chief investment officer, Richard Jeffrey.

Speaking at the Cazenove Capital Management annual investment conference for charities yesterday, Jeffrey told an audience of over 300 that he expected 2012 to be "a year in which forecasts are exceeded" with GDP growth likely to be more like 1.25 per cent than the current consensus prediction of 0.3 per cent.

Jeffrey attributed weak growth in 2011 to the persistent high levels of inflation in most world economies. Inflation is "demand destructive so we got less real growth," he said. However, falling inflation this year in the UK is positive and "by the fourth quarter of the year we could have inflation below 2 per cent".

Jeffrey also asserted that "the public sector borrowing requirement will improve more quickly than expected" and that "by the second half of the year, household confidence will rise". Predicting that "interest rates won’t rise for a long period" and advising the audience to "expect more quantitative easing", Jeffrey concluded that "2012 will be the year of pessimists confounded".

In a separate presentation to the same audience, Cazenove’s head of charities Jeremy Hervey said that there has been "a strong demand for inflation-plus mandates" with funds under management in this way "now £2bn".