Investment Newsletter - April 2015

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Investment Newsletter April 2015

The Bumpy Road to Downing Street Mike Deverell Investment Manager

In a few weeks’ time the country goes to the polls in what is the most uncertain general election in recent history. As we have said before, markets hate uncertainty and so it is possible we could see volatility around election time. However, to date we have not seen much evidence of this and the FTSE 100 has pushed past the 7,000 mark for the first time in its history. So does this mean that markets don’t care about the election? Clearly not, but it is true to say that historically there has not been a pattern of markets doing significantly better or worse following a Conservative or Labour victory. Whilst they have different policies in many areas, from an economic point of view the gap between the three main parties is relatively small. Oxford Economics recently released a study examining what would happen to the UK economy and debt position under the three main

parties. They forecast growth over the next parliament of 2.8% pa under the Liberal Democrats, 2.7% pa under Labour and 2.6% pa under the Conservatives. By contrast, debt would be lower under Conservative plans than under the other two. Andrew Goodwin, senior UK economist at Oxford Economics, told the Financial Times: “In our view it is very difficult to argue that the benefits offered by the more austere Conservative plans are anywhere near large enough to offset the opportunity of stronger growth offered by the plans of the Liberal Democrats or Labour,” he said. But he added that under the Tory plans, which would produce lower borrowing and government debt, “if you wait another 10 years or so, you would have capacity for stronger growth”.

Equilibrium Asset Management LLP (a limited liability partnership) is authorised and regulated by the Financial Conduct Authority. Equilibrium Asset Management is entered on the Financial Services Register under reference 452261. The FCA regulates advice which we provide on investment and insurance business; however it does not regulate advice which we provide purely in respect of taxation matters. Copyright Equilibrium Asset Management LLP. Not to be reproduced without permission.


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