Thursday, February 26, 2009
“Interest rate rises needed in the long-term may fall foul of political short-term expediency”
PSigma income manager Bill Mott believes there is now a 20 per cent chance of Armageddon for the UK economy. Mott says that the UK economy is now at a long-term inflection and that we can no longer rely on financial services and consumption to drive the economy forward.He says: “We need several years of anaemic growth so that our savings rate can be restored and so that the economy can rebuild its productive manufacturing base. This can only be achieved gradually over a number of years. In our view, there is a good chance that the measures already taken will deliver this readjustment.”Mott says the 20 per cent chance of Armageddon is one of three scenarios, one of which he says is a 50 per cent chance that ‘green shoots’ of recovery appear in the likes of cyclicals and start to rally.