Investors flag up ‘stagflation’ concerns

Nov 26, 2010
<p>New survey reveals what keeps UK investors up at night</p>

UK investors worry most about the prospects of another economic downturn combined with rising rates of inflation, according to a new survey of more than 16,000 private investors conducted by financial marketing specialist Dianomi.

Recession is the primary concern with inflation, cited by 16 percent of respondents, in second place, followed by higher taxes at 14 percent, and unemployment a close fourth.

The survey further reveals that older, more affluent investors are most worried about inflation, whereas younger, less affluent investors fear rising unemployment, higher interest rates, falling property prices and a drop in the value of sterling. Many respondents use the term ‘stagflation’ to describe a troubling combination of growing interest rate inflation and unemployment.

The survey also investigates which asset classes and sectors investors are considering moving away from: 42 percent of respondents are considering moving away from cash, 25.9 percent from fixed-rate savings bonds, and 23.9 percent from property.

According to the survey the most unpopular sectors are retail, with 30.4 percent of respondents considering selling their investments. North American investments are also causing concern, with 22.3 percent of respondents considering selling up. More than 21 percent are rethinking their European investments.

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