This year will be a period of greater volatility and vulnerability, according to Neil Woodford, head...
This year will be a period of greater volatility and vulnerability, according to Neil Woodford, head of UK equities at Invesco Perpetual.
Woodford remains cautious on the outlook for UK and US economic growth, particularly with respect to the consumer economy.
However, the UK economy has been more resilient and consumers have been prepared to take on more debt than he thought was likely, particularly in the face of rising interest rates.
“I believe we are now witnessing tangible evidence of the start of a period of slower economic growth, as well as a consumer correction, which is best represented by what is currently taking place in the US housing market and, to some extent, what is occurring in the subprime mortgage market as well.
“My view remains that we will continue to see more intense economic headwinds during 2007.
However, I am not forecasting a recession; I believe that the incredibly benign economic environment we have enjoyed for many years from a global and domestic perspective is going to change.
"I envisage that the UK economy will exhibit cyclical characteristics and economic growth will likely become harder to come by as we go forward.”