BBC News business editor Robert Peston, the man who made his name reporting on the depths of the financial crisis in 2008, is optimistic about 2013 claiming a 1% growth rate was realistic and said equities looked favourable compared to bonds.
Speaking at New Model Adviser® conference, Peston said he took the view in 2008 that the UK would grow about 1% a year for a decade, which was not achieved, but said he was sticking with this forecast as an average result for the next ten years.
Peston (pictured) said he was in favour of the transparency the retail distribution review (RDR) would bring and the fact it would reduce mis-selling.
However, he said that as a policy it was at odds with the government’s theory of behavioural economics, which meant constructing things in a way which persuades rather than forces people to act, like having to opt out of auto-enrolment.
‘Behavioural economics would tell you that if it looks like you’re getting a free product, you’re more likely to buy it,’ he said. ‘So it’s plainly the case that greater transparency for what you’re paying will undoubtedly put people off, which is not necessarily a good thing for this country when saving in the long term is way too low.’
Peston said that he was still concerned about several macro issues including the hard landing in China, the Eurozone crisis and banks’ high levels of borrowing.
‘In Europe, 80% of finance is provided by weak banks, whereas in the US it’s only 20%, with investors contributing more to companies and households,’ he said. ‘Banks in Europe remain chronically short of capital.’
He said that banks make up 200% of GDP in Europe and only 75% of US GDP.
Peston said that a possible downgrade of the UK’s AAA rating would not have a ‘dramatic effect’ as was seen in the US, and that he was not a pessimist on the UK's future.
‘Although we talk about austerity and austerity is real, nonetheless, in terms of the public sector, it could have been a hell of a lot worse,’ he said.