Invesco Perpetual’s Neil Woodford has warned that there is a very real chance that gilts could lose their AAA-rating as a result of the mounting fiscal deficit in the UK.
Citywire told how Woodford stated “There is a relatively high probability at least of it…There is a decent chance that we will be downgraded. It is a near certainty if we don’t at the next election properly deal with the deficit. If we don’t take the medicine we will be downgraded. If we do then we might avoid a downgrade.”
He also reiterated his view that despite mounting good economic news the recovery will be a slow and painful one, characterised by a series of economic disappointments. Indeed the economic news of the past quarter has not persuaded him that a V-shaped recovery is under way. He still believes there is a possibility of a couple of quarters of negative growth as banks, consumers and governments are forced to de-leverage much further.
See www.citywire.co.uk for the full story