Alliance Trust warns on political uncertainty

Big Ben

Persistent uncertainty over devolution and Britain’s membership of the EU is casting a shadow over business and the wider UK economy, the Scottish-based Alliance Trust has warned.

The Dundee-based investment and savings firm, led by Katherine Garrett-Cox – who spoke out over Scottish independence before last year’s referendum – said it was ready to act to protect its customers but urged politicians to act responsibly as the debate over devolution presses on.

“[The debate over Scottish independence] was an unsettling period for many of our shareholders and customers, particularly those in other parts of the UK, and inevitably we, along with other Scottish-based companies, were affected.

“While the debate over the extent of future devolution continues, we would urge all participants to recognise that an extended period of uncertainty is not in the interests either of business or the economy as a whole and we remain ready to act as necessary to protect our shareholders’ and customers’ interests.”

Garrett-Cox said the upcoming May general election and the prospect of a referendum on UK membership of the EU in the event of a Conservative victory, was creating uncertainty.

She added that with UK inflation so low - currently just 0.3% - Alliance Trust believed interest rates would stay lower for longer, suggesting the Bank of England might delay the first hike until as late as 2017.

“Commentators have been predicting that interest rates in the UK will rise ‘next year’ for at least the last two years, there is a high probability that they will be using the same words this time next year,” she said.

Alliance Trust is also balancing the various risks posed by developments abroad.

“The investment team will position the portfolio to take account of any market volatility resulting from economic and geo-political developments relating to the euro, the conflicts in Ukraine and the Middle East,” said Garrett-Cox.

She made the comments as Alliance Trust announced results for 2014. Assets under management totalled £1.9bn at the end of the year, generating net inflows of £88m and reducing losses by 23% to £3.2m.

The total dividend for 2014 - including a special dividend of 2.546p - rose by 14.3% to 12.38p a share.

Powered by Guardian.co.ukThis article was written by Angela Monaghan, for theguardian.com on Friday 6th March 2015 12.04 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010

 

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