Woodford: Recovery will take years

Invesco Perpetual’s Neil Woodford has warned that Britain and America will not see sustained economic recovery or growth for at least three to four years.

Speaking in a conference call for investors last week, the manager of the Invesco Perpetual Income and High Income funds said: “The outlook for the economy is weaker than the consensus view. [The idea that we will have] a normal growth year in 2010 is just plain wrong – it is far too optimistic.

“We are in a difficult environment globally and the UK and US are having a particularly bad time. This crisis will run for a long time – a lot longer than the second half of this year – and will encompass a prolonged adjustment,” he said.
“During benign economic conditions, debt built up on an unprecedented scale. The process of rebalancing the global and domestic economies will take many years. I would not expect to see sustained recovery or growth in the economy of North America for three or four years,” he added.

Woodford called the bottom of the market last year, but it has since fallen further, with the FTSE 100 reaching a six-year low of 3,460 this month.

“I wasn’t conservative enough,” the manager ad­mitted. “I still believe we have found a bottom for the UK market and Wall Street. But that doesn’t mean share prices will go up from here.”

The manager remains defensive, adding to positions in pharmaceutical companies GlaxoSmithKline and AstraZeneca, tobacco stocks, and EDF, a French utility group. He has also unhedged his portfolios against further falls in sterling.