Press comment: Chancellor in Spring Statement inflation warning
If you are covering today’s Spring Statement and the Chancellor’s warning of the need to manage inflationary pressures in the event of a no deal or disorderly Brexit, please see the following commentary from Quilter Investors portfolio manager, Helen Bradshaw:
“In a Spring Statement overshadowed by Brexit, the Chancellor today issued a cautionary note on the possible inflationary impacts in the event of a no deal or disorderly Brexit. Although some inflation is crucial in a well-functioning economy, with falling prices risking a stagnation in spending, it is a careful balancing act. The Chancellor warned that although disruption is likely if the UK exits the EU without a clear agreement, the scope for deploying monetary and fiscal tools to stimulate the economy may be limited.
“The Chancellor is fearful of the potential impact of a fall in the value of Sterling and the possible knock-on effect on the price of imported goods, alongside the inflationary effect of accommodative monetary and fiscal policy. As a result, he warned that the UK has only limited room for stimulus and would need to balance that against inflationary worries.
“Were there to be an inflationary impact from Brexit, it is possible the Bank of England may view that as a tolerable short-term phenomenon. But if it were to become an issue longer-term then the Bank would have to consider rate rises to stick to its inflation targets and maintain economic equilibrium.
“For investors, it is important to remember that a globally diversified portfolio has some natural protection against domestic matters because the UK will only make up a part of the holdings in a portfolio. However, alternative asset classes such as infrastructure which can offer inflation-linked cashflows, and floating rate instruments that benefit from rising rates, could become particularly valuable in the event of rising inflation.”
Notes to editors
Quilter Investors is part of Quilter plc. It provides multi-asset investment solutions designed for advised clients in the UK and internationally and manages 17.8bn on behalf of its investors (as at 31 December 2018).
Quilter plc is a leading wealth management business in the UK and internationally, helping to create prosperity for the generations of today and tomorrow.
Quilter plc oversees £109.3 billion in customer investments (as at 31 December 2018).
It has an adviser and customer offering spanning: financial advice; investment platforms; multi-asset investment solutions and discretionary fund management.
The business is comprised of two segments: Wealth Platforms and Advice and Wealth Management.
Wealth Platforms includes the Old Mutual Wealth UK Platform; Old Mutual International, including AAM Advisory in Singapore; and the Old Mutual Wealth Heritage life assurance business.
Advice and Wealth Management encompasses the financial planning network, Intrinsic; Quilter Private Client Advisers; discretionary fund management business, Quilter Cheviot; and Quilter Investors, the Multi-asset investment solutions business.
The Quilter plc businesses are being re-branded to Quilter over a period of approximately two years:
• The Multi-asset business is now Quilter Investors
• Intrinsic to Quilter Financial Planning
• The private client advisers business is now Quilter Private Client Advisers
• The UK Platform to Quilter Wealth Solutions
• The International business to Quilter International
• The Heritage life assurance business to Quilter Life Assurance
• Quilter Cheviot will retain its name
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