Economic Update

Written by Helen

08 / 05 / 2024

We were delighted to host Dinner and an Economic Update recently at UBS, where we were joined by Dean Turner and Neil Cole as expert speakers. We welcomed CEOs, Chair/NEDs and investors from UK growth businesses for dinner and discussion, with key take aways from Dean and Neil as follows:
Dean Turner – Chief Economist Europe

  • The UBS base case remains for a soft landing for the US economy. In the UK and Europe, following two-years of underperformance, UBS expects a moderate recovery driving rising consumption and recovering private sector investment. 
  • The disinflationary process is set to continue, notwithstanding some “noise” in the data. This should allow central banks to lower interest rates later this year, led by the ECB in June, The Bank of England in August, and the US Federal Reserve in September. 
  • A falling inflation and interest rate environment favours a higher than benchmark allocation to quality bonds. Quality equities should also deliver positive returns in a soft-landing scenario.
  • Geopolitical risks to play an outsize role in 2024, this favours diversification within portfolios, as well as holding exposure to oil and gold. 
  • Election risk in the UK as high as many believe. Whoever wins the elections will face the same fiscal choices, limiting the scope for a dramatic shift in policy. 

Neil Cole – Head of Private Markets UK

  • UBS views Alternative Investments, and in particular Private Markets (including Private Equity, Private Credit and Infrastructure) as being a key element of a diversified investment portfolio.
  • 2023 was a difficult year for Private Equity, with an uncertain macro-environment causing a significant slow-down in deal making, meaning PE funds were slow to deploy capital and very little was seen by way of exits/distributions.
  • There has however been a marked shift in sentiment since very late 2023, and activity has picked up and has almost returned to ‘normal’ levels that we would see in a fully functioning market. Fundraising has increased as PE firms start to see real opportunities following an adjustment in valuations, and older vintages have now started to realise returns and return cash to investors.
  • There has been significant media coverage of some of the risks within Private Markets, and in particular the growth in Private Credit from what the regulators call the ‘shadow banking’ sector. This is because non-banking institutions have taken on a large share of lending that used to be fulfilled by banks. Increased regulation of this sector is a natural development following a period of significant growth and does not indicate any issues with Private Credit as a strategy for diversified investment portfolios. 
The dinner was hosted by Bailey Fisher's Managing Partners, Andrew Moore and Toby Young, with Paul Harding and Rishi Raval from UBS Wealth Management.

Attendance at this event was by invitation. If you would like to find out more about future events in this series please contact Andrew Moore or Helen Poole

Photo by micheile henderson on Unsplash