Policy promises and pledges are not the real concern for investors according to Battersby’s new ‘Progeny Asset Management Political Filter’ which dismisses recent political campaign pledges as unimportant to investment decisions.
The real risk investors should be aware of, he added, is the rise of foreign direct investment which has pushed up inflation and could ultimately lead to the Bank of England increasing interest rates sooner than many have predicted.
Battersby said: “It could be sooner than most of the pundits are suggesting. A lot of that comes down to the target for inflation being 2%, and at the moment it’s 2.3%.
“The fact that the target is 2% to my mind brings forward the time when interest rates will actually rise.”
Battersby believes the BoE could hike rates to 0.5% as soon as the fourth quarter of 2017, rather than the common forecast that the bank will hold off until mid-2018 at the earliest.
While not a dramatic rise, Battersby suggests it could panic the 40% of the population with a mortgage and restrict their spending power.
He added: “You cannot push people’s living expenses up to the extent they do not have any money to spend because it would choke off any recovery we have seen since 2009.”