View more on these topics

CSR: Fidelity’s Greetham: The UK is not Greece

Fidelity director of asset allocation Trevor Greetham has said the UK is under less pressure from markets to cut Government spending than is commonly believed.

Greetham says: “The UK is not Greece. A country with its own currency can devalue its exchange rate or print money to finance government spending. Ironically, public spending cuts could lead to a further increase in government debt if they push the economy back into recession.

“We expect the Bank of England to print more money in an attempt to boost activity and we wouldn’t be surprised to see sterling weaken over the next few years.”

Greetham says the UK’s “tepid economic recovery already looks to be petering out with house prices falling again”.

He adds “Holders of gilts will always be repaid in nominal terms. Their main concern, that of runaway inflation, is a remote prospect. Stripping out changes in VAT, UK consumer price inflation was just 1.3 per cent in September and unemployment is likely to remain high. This is hardly the backdrop for a wage-price spiral to set in.”

Meanwhile, F&C head of UK equities Peter Lees says equities and bond markets would find little to either excite or shock them in the CSR.

Lees says there is a couple of sectors of the UK market whose prospects could be boosted as a result of the spending review.

He says: “Investment in transport has largely been protected and in some areas increased, which will be positive for certain stocks connected to the transport sector.

“In addition, if the Government expects to be able to recover the billions fraudulently claimed in benefits at the same time as cutting the budget for the departments that are responsible for benefits, there could be opportunities for some support services companies as a degree of outsourcing will be inevitable.”

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com