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Crystal ball

Schroders UK institutional survey reveals economic concerns for 2013

At the recent Schroders annual UK institutional conference in London, attendees were asked to share their views on the UK economy including expected inflation figures for 2013 and which, if any, investment strategies are being considered in light of the current environment.

Attendees were asked the following question: “The UK is now officially out of recession. Do you think there is a risk that the UK could fall back into recession in 2013?”  

An overwhelming 83 per cent of participants said yes with only 17 per cent saying that they thought the UK would remain out of recession over the next 12 months.

On inflation attendees were asked “UK inflation is currently between 2.0 and 2.5 per cent. What are your expectations for UK inflation in 2013?”

Sixty per cent responded saying they expected inflation to remain the same, 33 per cent responded saying they expected inflation to rise above three per cent and seven per cent responded saying they could see inflation falling below 1.5 per cent.

In the current environment attendees were asked if they: “would consider looking to global and more unconstrained fixed income investing in the future”.  Almost 60 per cent of respondents said that they would.

Neil Walton, head of Schroders UK business development group, says: “The low yield environment continues to challenge traditional fixed income approaches. The views highlight a wider trend towards global and less benchmark driven fixed income strategies by UK pension schemes.

“Another interesting result from our survey has been the attendees’ attitude to the UK economy with over 83 per cent of participants recognising the risk of a return to recession in 2013 - 33 per cent said they could see inflation rising above 3 per cent over the next 12 months.”

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