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Government “got it wrong” with £20bn fiscal policy, says PWM

The UK Government’s £20bn fiscal stimulus package will not be enough to prevent the onset of further gloom in 2009, says Premier Wealth Management managing director Adrian Shandley.

According to Shandley, the amount of borrowing being taken on by the Government is “ridiculous” and the announced measures are costing a lot of money but are giving “very few incentives from a fiscal point of view”. He says: “We’re convinced in the long-term that the Government’s got it wrong. The Bank of England’s latest base rate cut should have a better effect on the general economy but we’ve seen a lot of bad news from the retail, manufacturing and financial sector and in the New Year there’s certainly worse to come.”

Shandley is losing hope in a minor market rally in the run up to Christmas and doesn’t envisage a strong turn-around in the UK within the next six months. He says: “We think that a lot of firms will survive in the hope that Christmas will bring a recovery. But in the first quarter of 2009 we’re looking at a lot more firms announcing redundancies and going to the wall.”

On strategy, the case for equities is compelling particularly for those investing for income, says Shandley: “The yields are much better than cash and there will probably be a revival in equity income funds and investment. We’re cautious on corporate bonds as they’re overvalued and overbought, as are gilts.”

Currency movements are a concern, he warns and are down to global economic confidence in the UK which is faltering. He says: “We don’t have the belief that the Government has done the right thing. I don’t see any real recovery anytime before Q3/Q4 next year and Q1 2010.”


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