The United Kingdom’s fortunes have been weighed in on by experts, analysts and other professionals, and the consensus doesn’t look that favorable. Can the region surmount the odds and keep its exchange traded fund (ETF) growing?
Fearing that Britain could suffer a debt crisis next year, experts are shunning government debt, reports Ali Hussain for Times Online. The government is trying to bridge its $285.5 billion deficit, and has issued more debt, or “gilts,” which has pushed prices down and yields up. [Ways to play Europe with ETFs.]
Richard Buxton at Schroders, the fund manager, believes that the U.K.’s sovereign credit rating could be downgraded since “the forecast path to gradual deficit reduction has been extended.” [Britain: The good and the bad.]
Anthony Bolton, president of Fidelity International, has cautioned investors that the sterling, bonds, shares and property could “double dip” in 2010 if government debt is still an issue. Other analysts also think that “a year of two halves” will occur in 2010, with an expected rally in the first half, followed by a dip in the second half.
The Confederation of British Industry (CBI) says the recovery is “fragile,” and growth will unlikely reach pre-recession levels till 2011, writes Kat Higgins for Sky News. The CBI also expects that unemployment will reach 2.8 million next fall and workers will likely face a round of pay freezes. Growth may be slowed by poor credit conditions, consumers increasing savings and declining public spending. [How consumer frugality could hamper U.K.’s ETF.]
For more information on the United Kingdom, visit our United Kingdom category.
- iShares MSCI United Kingdom (NYSEArca: EWU): up 32.9% year-to-date
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.