Tough times ahead warns investment guru
HIGH-PROFILE investment adviser Justin Urquhart-Stewart has warned investors that testing times are ahead as the boom time of recent years is set to wane.
Speaking at the launch of Yvonne Goodwin Wealth Management in Leeds, the financial pundit – well known for his trademark red braces – highlighted the fact that the pressures caused by complacent investment bankers and money men had caused serious issues in the US sub-prime sector – compounded by inaction from the Bank of England to prevent the Northern Rock crisis.
Mr Urquhart-Stewart, who heads up Seven Investment Management, added: “Complacency is the smile of fools. The confidence of recent years has led many to ignore economic fundamentals and play down talk of tougher times ahead. Levels of risk across the global economy are significant – demonstrated by debt levels in the US and UK as well as the fall-out from the sub-prime collapse.”
Yvonne Goodwin Wealth Management, led by the former Pearson Jones associate director with 28 years' experience in financial planning, was launched at the Malmaison hotel in Leeds yesterday.
The firm will work with wealthy families, individuals, trustees and companies to provide financial advice and tax planning.
Mr Urquhart-Stewart's analysis of inflationary pressures was equally downbeat as he described the levelling out of the so-called China Price – the ability of China to produce something at lowest cost – which will make imported goods into the UK more expensive.
This is added to by higher commodity prices, which have been prompted by a number of factors – not least the increase in demand caused by China's meteoric rise.
He continued: “China's best export recently has been ever-cheaper goods. It has enabled the global economy to grow without driving up inflation. Having now reached its limit, things are set to change.
“The UK will be particularly badly hit by a global slowdown due to its heavy burden of debt – both public and personal. As the cost of money rises from banks tightening their lending arrangements and those on two or three-year fixed-rate deals remortgage onto higher interest rates, we will all feel the effects. While the
Bank of England will no doubt cut interest rates shortly they will fear sparking inflation – watch out for government rhetoric on rising inflation in the coming months.
“Overall, we will probably not go into a technical recession but we won't see the high growth of recent years. Official UK unemployment figures may seem low
but factor in the 7.84m economically inactive and things appear quite different. People are feeling the pinch of rising prices and borrowing and will rein in their spending. A big test over the next few months is how quickly the banking industry recovers its confidence and relaxes the tight credit markets.
“More challenging times are on their way, which highlights the importance of strong financial planning, maintaining a balanced portfolio and reviewing your situation regularly,” he concluded.
