Recession warnings for the UK mount: deVere

Yasmine Raso

Senior Journalist, Financial Newswire

7 November 2022

Warnings have mounted for investors with exposure to UK assets to reassess their investments and protect their money, after the central bank announced its largest rate rise in decades and recession concerns rise.

Chief executive of advisory and fintech organisation deVere Group, Nigel Green, said the Bank of England’s announcement to hike interest rates by 75 basis points from 2.25 per cent to 3 per cent signalled that it was stuck in a “difficult, unenviable position”.

“It is tightening monetary policy after inflation hit a 40-year high of 10.1% in September, which is a staggering five times higher than its 2% target,” he said.

“As well as being concerned about a wage-price spiral, the Bank is also aiming to reassure markets after the massive fiscal uncertainty last month that tanked the pound and drove up government borrowing costs.

“We expect the decision to hike rates is set to deliberately plunge the UK’s consumer-led economy into a recession.

“In short, the Bank is prepared to increase its stranglehold on households and businesses and to sacrifice parts of the economy in order to tame inflation.”

Green also urged investors to revise their investment portfolios and consider the changing economic conditions to guide decisions on what to increase or decrease exposure towards.

“You should take a look at sectors that are likely to be recession-resistant, including food, energy and financial services,” he said.

“In addition, in an environment of rising inflation and interest rates, less familiar, return-enhancing asset classes should also be considered. These might include venture capital, structured products, cryptocurrencies, high-dividend stocks, hedge funds and managed futures.

“We are also likely to see investors increasing their exposure to overseas financial assets, such as global equity funds.

“The Bank of England is raising interest rates to intentionally create a recession in the UK. If you’re serious about safeguarding your investments, I’d act sooner rather than later.”