6 thoughts on “If only”

• jack c says:

  March 29, 2011 at 11:29 pm

  The M W article is over 1 month old however here is an update on a similar theme

  Invesco Perpetual income guru Neil Woodford believes Chancellor George Osborne is being too optimistic in his expectations for UK growth.

  Speaking at last week’s Budget, Osborne revealed that the Office of Budget Responsibility had downgraded the growth forecast for 2011/12 from 2.1 per cent to 1.7 per cent and from 2.6 per cent to 2.5 per cent for 2012/13.

  Speaking in an Invesco Perpetual webcast this morning, Woodford says: “The challenge for the coalition government over the next two or three years will be tackling the budget deficit, doing so is dependant on underlying growth in the UK economy and I do not see it.

  “Therefore I do not see growth coming through as the Chancellor has forecast.”

  Woodford rejects predictions that interest rates will rise next month as he feels any rise will not have a huge impact on inflation.

  He says: “The fact is that most of the drivers for inflation are outside the control of the Monetary Policy Committee, like tax increases, food and energy prices.

  “Data from UK economy will be weak and will diffuse appetite for higher interest rates. If there is any slackening in fiscal austerity then rates may go up this year.”

  Woodford says the primary impact of the earthquake and tsunami in Japan and the ongoing problems in North Africa will be on energy prices.

  He says: “There is no doubt it will create more pressure in the gas market as that will be the back-up solution for the nuclear slowdown. There has been a lot of talk of the problems being inflationary but higher energy prices are almost a tax on developed nations so you could argue that it is almost disinflationary as it takes money from the consumer pocket.”

  Woodford acknowledges that Japan will suffer on short term confidence but says the nation will get back on its feet.

  He says: “The dip in production output in Q1 and Q2 this year will come back next year.”

  In an exclusive interview last month, Woodford said that he expected to increase his exposure to the pharmaceuticals sector from 25 per cent to over 30 per cent, highlighting a once in a decade opportunity for investors.

  Woodford says investment commentators are focussing too heavily on the problems in the pharma sector, rather than the positives.

  He says: “People seem to be highlighting the problems with patent cliffs – faced by AstraZeneca and GlaxoSmithKline – and other concerns in the pharma sector rather than the upside. There are opportunities such as an aging population in the developed world and demand for drugs in India and China which they cannot get access to in the emerging world.”

  Woodford also pointed to problems for the two oil majors, BP and Shell, both of which he says are “very challenged”.

  He says: “Both are faced with huge costs of finding and exploiting resources on a scale that can offset declines in other parts of their business is rising.

  “They are both doing so at present with high oil prices but They have become very cash consumptive businesses and in my view there are better opportunities.”

  SOURCE http://www.moneymarketing.co.uk/investments/woodford-osborne-too-optimistic-on-uk-growth/1028658.article

• uncle tom says:

  March 29, 2011 at 11:59 pm

  Bit of a rant, but quite fun..

  A more subtle letter might express concern about the ‘credibility gap’ – that separating the BOE’s remit, and what it manages to deliver..

• markj69 str05 says:

  March 30, 2011 at 1:24 am

  Much enjoyed, thanks mr g. If only eh?

• techieman says:

  March 30, 2011 at 7:30 am

  hey Jack

  I live near Woodford….. in almost every meaning ;). [i will spell that out – i mean i agree with his views generally (down to the Japan e/quake and the effect on Gas prices – not that i disagree with that but thats not really the point at issue) but i also mean Wanstead East London is down the road from Woodford!]

  Thanks for posting. Sure you are busy with some “taxing” shenanigans until tax yr end..

• jack c says:

  March 30, 2011 at 9:32 am

  @techieman – you’ve got it in One(stead)

• mark says:

  March 30, 2011 at 10:27 am

  we should all print this letter and send it to the bank of england.

  You should also email it as the response is well a 10 year wrote the response for a 2 year old

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