View more on these topics

Investment view

When assessing the market&#39s response to last week&#39s interest rate cut, the word “underwhelmed” springs to mind. Shares were already struggling, with good days looking suspiciously like bears closing out profitable positions. Any hopes that cheaper money might bring the buyers out were swiftly dashed. Of course, manufacturing output figures published the following day gave a clue as to why the MPC acted as it did. Output for 2002 as a whole was down by 4 per cent – the worst performance in a decade. It is not just the City that is in recession.

Just in case you are of a mind to ignore what happens in the manufacturing sector on the basis that we are now a service-based economy, let me warn you that one side-effect could well be a downward revision to UK economic growth. Already, analysts are pencilling in weaker numbers, leading many to the view that perhaps Gordon Brown is not so clever after all. Luck should never be dismissed in politics – particularly in the office of Chancellor of the Exchequer. If, indeed, the economy is slowing, then the tax rises due next April could have a last-straw feel about them.

That may be no bad thing. If 2000 and 2001 were about the unwinding of the overheated position built up in the second half of the 1990s, then 2002 was more to do with investors&#39 concerns over the direction of major economies and consequences of geo-political risk. Throughout last year, the official line was that the UK is immune to any creeping influence from a slowdown in America. The market, on the other hand, has been saying that it was not so sure. As recession gripped isolated sectors, it was hard not to wonder if one&#39s assessment was not influenced by personal experience. Perhaps the effect of the downturn in the market is about to invade other areas.

Last week saw a sharp contraction in demand for more expensive property. According to Country Life, the proportion of enquiries for the top end of the housing market – homes costing £1.5m or more – suffered a slump of significant proportions. Apparently, as recently as the second quarter of last year, more than 57 per cent of the interest shown through its online property service was for these properties. By the fourth quarter, enquiries had declined to little more than 14 per cent of the total. Moreover, the most popular price bracket had fallen from £2m to just £750,000. This is not just an absence of bonuses in the Square Mile. Perhaps this remains a rich man&#39s recession but I would not bank on it remaining so.

Back in the early 1990s, when we last travelled through recessionary times, there were many who found it difficult to equate poor economic data with a booming stockmarket. Yet that was the position. Nor were true market professionals surprised. Share prices anticipate events as well as reflect current circumstances. Then, investors were looking forward to the recovery that seemed certain to arrive. It would not surprise me if we had a re-run of this scenario just a decade later.

One difference that exists, though, will be the spending commitments entered into by this Government and the knowledge that they are pretty much half way through their second term of office. They may not always have the luxury of a divided and weak opposition to allow them to paper over the cracks of service non-delivery. Spending on services requires more taxation or higher borrowing but one consequence of recessionary times is that the tax take declines. Overall, I am becoming more optimistic for the market with each piece of economic bad news but I will still be closely watching what the Chancellor does and continuing to keep an eye out for developments in Iraq.

According to a study carried out in Sweden, mobile phones really can damage your brain. I received my first mobile back in the mid 1980s when they were bulky and batteries lasted for barely a phone call. They were rarities then. These days everyone, from primary school children through to grannies, carry and use them in the most unlikely of places. My guess is that, even if proved harmful, mobile phones are now so much a part of contemporary culture that people will be unwilling to give them up. Instead, a growth in the use of hands-free kit, which allows people to walk down the street looking as though they are talking to themselves, seems likely. What is society coming to?


Odey Asset Management – Pan European Fund

Wednesday, 12 February 2003 Type: UCITS Aim: Growth by investing in European equities Minimum investment: Lump sum euros £100,000 Place of registration: Dublin Investment split: 100% in European equities Charges: Initial 5%, annual 1.5% Commission: Initial 3% Contact:

Raising the mark on standards

This year will be an important one for the Raising Standards quality mark scheme.Just two years after its creation, we have achieved critical mass, with more than 50 per cent of the market accredited or preparing for accreditation.Standard Life, Halifax Life and Clerical Medical are in the dry-run phase – the first step towards securing […]

Revenue in rethink on commercial property in SSASs

The Inland Revenue has backtracked over curbs on small self-administered schemes owning commercial property used by the business of the sponsoring employer.The leader of the Revenue pension simplification review team Peter Hopkins told the Taxbriefs conference in London last week that it wanted to allow property investment by SSASs if possible.The Revenue simplification paper, published […]

Time to get the transfers

As a former tied agent of Canada Life I have many clients who hold policies with Canada Life.In the 10 years since I left Canada Life to become independent, it has frustrated me no end that Canada Life have steadfastly refused to switch these policies into my agency for client servicing and renewals.The reason given […]

Where next for the price of oil?

Having stabilised at around $65 a barrel, many investors are questioning if the price of oil will rise, and when. Richard Hulf provides his view. Richard Hulf, manager of the Artemis Global Energy Fund, sets out his thoughts about how the oil price may move through the next six months. At the start of the […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    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