5th March 2015
City banker and chairman of RIT Capital Partners Lord Rothschild has warned savers in the £2.6bn investment trust that the world faces a geopolitical threat “perhaps as dangerous” as World War II.
In the portfolio’s annual results statement the veteran investor issued a gloomy warning over the state of the global economy.
Despite a backdrop of a prolonged period of loose monetary policy and ultra low interest rates Rothschild highlighted that world GDP grew at “a disappointing and uneven rate in 2014”.
He went on to caution that stockmarket valuations were near all-time highs, and that the value of money has also been debased as countries have sought to boost growth by lowering the value of their currencies.
Rothschild said: “The unintended consequences of monetary experiments on such a scale are impossible to predict.”
But he added: “In addition to this difficult economic background, we are confronted by a geopolitical situation perhaps as dangerous as any we have faced since World War II: chaos and extremism in the Middle East, Russian aggression and expansion, and a weakened Europe threatened by horrendous unemployment, in no small measure caused by a failure to tackle structural reforms in many of the countries which form part of the European Union.”
However given that the developed world is still enjoying zero or even negative bond yields, he asserted that shares may well continue to be asset of choice for investors.