Neil Woodford forecasts “years of turmoil”
Speaking to the Telegraph at the weekend, Woodford noted while that UK general elections are usually “pretty unimportant” events on the market calendar, the impending 7 May poll will be altogether different, “given the political uncertainty and given the influence that fringe parties are going to have.”
Last month, Woodford voiced concerns that ongoing uncertainty about British membership of the European Union could be hampering greater investment in the UK, stating “this country will have to make a choice about whether it is a fully signed up member of a Eurozone project or not.” Now, he believes the likelihood that neither Labour nor the Conservatives will secure a majority, and the prospect of an unstable coalition being formed – and not lasting a full parliamentary term – are damaging investor faith.
“Investor confidence could be rattled for a period of several years as a result,” he said. “Can you expect Scotland will part of the UK if the SNP is supporting a minority Labour administration? What will happen to Britain’s membership of the Eurozone if the Conservatives join forces with UKIP? These are big uncertainties that will not become that much clearer after the election.”
“I expect we will have quite a lot of instability after the election. The government not lasting the statutory term would create even more uncertainty. Sterling is currently trapped between a weakening euro, and a strengthening dollar – and the election result could hurt the currency too.”
“You have to remain particularly vigilant about what is being said and ultimately take a view about what is implementable and what is not. I am cautious about the extent to which political uncertainty and some pretty not well thought through policies may affect underlying investments.”
“These are interesting times, but uncertain times,” Woodford concluded. “You have to be wary as an investor in this market with that backdrop.”