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&#39Equities going nowhere and BTL going bust&#39

The equity markets will show no significant returns for a long time as disillusioned investors opt for alternative investments, according to leading economist Roger Bootle.

Bootle, an adviser to the last Conservative Chancellor Ken Clarke, told PIMS 2002 delegates that poor stockmarket performance over the last two years and scandals such as Enron have driven cautious investors away from equities. He says the recent boom in buy-to-let is one example of investors turning elsewhere.

But he told delegates on board the Aurora that the shift to buy-to-let has left the housing market resembling the high-tech sector before it collapsed. To avoid a similar disaster, he said the Bank of England should begin raising interest rates, but said he would not be surprised if they fell even lower than their current level of 4 per cent.

With property markets booming and stockmarkets volatile, Bootle said it would be a some time before investors, who he believes have become accustomed to unnaturally high returns, feel confident enough to return to equities.

He said: “There is considerable disillusionment among the average investor. People do not want anything to do with the stockmarket. Equities are going nowhere, at best, for a long time.”

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