Bill Mott: it's game over for financial services

The UK economy is at a major inflection point and needs to undergo dramatic rebalancing, veteran fund manager Bill Mott has said.

‘For the last 25 years no economy in the world has been so biased in favour of certain sectors,’ Mott said, adding that it was ‘game over’ for the financial services sector’s role in providing the mainstay of the UK economy.

Speaking at the Cheviot Investment Symposium, Mott - who runs the PSigma Income fund - said: ‘We are at a major inflection point in the UK economy.’

‘The UK economy needs to undergo a dramatic rebalancing… All the growth has been driven by consumption and by financial services.’

‘All of us here are participants in the financial services sector and we know it's game over – the future is going to be much different with more regulation.’

Mott said that the other pillar of the UK economy – consumption, which has been driven by a housing boom – will also be over for good: ‘Mortgages are going to be much harder to come by. We are not going to allow the excess that happened in the past.’

He said PSigma’s view is that there is a 60% chance the UK is ‘doomed to a multi-year period of pretty anaemic growth’ and believes the chances of a black swan scenario are high.

However, despite the prediction of doom, Mott was positive about the investment opportunities that could be an outcome of the economic rebalancing the country needs.

‘The great thing about the current environment is the portfolio which I think will be in pole position for the anaemic tightrope walk,’ Mott said, adding that he favours big name consumer-focused stocks such as Unilever and Vodafone as an inflation hedge.

Bill Mott runs the PSigma Income fund and is rated 33 out of 36. Over three years from the end of December he has delivered 39.4% versus 42.85% by the FTSE All Share TR Index and 22.1% by the FTSE 360 Higher Yield TR Index.