Emma Wall: Hello and welcome to the Morningstar series, 'Market Reaction.' I'm Emma Wall and here with me today is Peter Hensman, Global Strategist for Newton.
Hi Peter.
Peter Hensman: Hi.
Wall: Big events coming up in the U.K. this year; one General Election, maybe even two depending upon how the first one goes. How that sort of thing affect growth we should expect to see as an economy?
Hensman: Well, to us, the uncertainty that that creates is going to create a bit of a headwind to the kind of growth we're likely to see this year because what will businesses do? Do you make plans about long-term investment when you have that degree of uncertainty over the outlook? There is, for us, a reason to delay that decision to at least later in the year if not 2016.
Wall: So, maybe stagnant this year then?
Hensman: Well, it certainly creates a challenge that – a range of factors going on. The flipside of that is very much the lower pricing that we're seeing coming through. That is undoubtedly a positive for individuals and their ability to spend money. So, a lot of mix but we would expect the growth will undershoot most expectations in the market at present.
Wall: You've mentioned pricing there. The big impact is, of course, the oil price falling. It's been very negative for economies that rely on the oil price like Russia. It's been positive for other countries, the smaller Asian countries that import oil because it means their costs have gone down. How does it affect the U.K. economy?
Hensman: Well, again, it's a very mixed bag. So, undoubtedly, this is a relief to the consumers. It's fantastic to drive along the high street and see the lower prices being quoted for the petrol you want to put in your tank. The flipside of that is that we're also seeing a number of the big oil companies announcing layoffs, delaying or cancelling investment plans. So, even here there is a mix of effects. On balance, in the short term, we wonder if it's perhaps more of a drag on activity rather than a positive.
Wall: Peter, thank you very much.
Hensman: Thank you.
Wall: This is Emma Wall for Morningstar. Thank you for watching.