Alliance warns of British recession

Scottish financial giant Alliance Trust said yesterday the UK was heading for a “mild” recession at least.

Outlining the impact of the Brexit vote on its own business looking after many billions of pounds of clients’ investments, Dundee- based Alliance said the economic outlook for the second half of 2016 was unclear after the UK’s decision to leave the EU.

It added: “The UK economy appears set for at least a mild recession as investment and consumption freeze up in the midst of so much uncertainty.

“Thequestionremainsas to whether this will spill over into Europe and result in a slowdown across the global economy. The unprecedented nature of the current situation makes forecasting the impact particularly challenging.

“Political risks abound; from the US presidential election in November to other important elections

“The economy appears set for at least a mild recession”

and referendums in China, Germany, France and Italy over the next 18 months.

“With global economic growth already fragile, political uncertainty is sure to be a headwind for equity markets.

“In this uncertain environment we believe a defensive portfolio that is invested in companies that are growing through structural change – rather than those that are dependent on cyclical tailwinds – will be key to investment performance.”

Alliance underperformed throughout June, when its quoted equity holdingsgaveupgainsseen over the first five months of the year amid “significant volatility” in markets, particularly around the time of the EU Referendum.

First-half results showed anet asset value (NAV) total return of 6.6%, below the trust’s 12% benchmark.

Net asset value per share – a key industry benchmark – stood at 591.4p at June 30, up from 561.1p at the end of last year.