Progress is being made in healing the world and UK economy although huge inequalities remain, a leading private investment expert has told the Abta Travel Convention.
Justin Urquhart-Stewart, head of corporate development and cofounder of Seven Investment Management, said there are now three different types of people: “the haves, the have nots and the have yachts”.
He said the improvement in the world economy has not been brilliant but the long-term average growth is 3% a year.
“If you’d have told me that 10 years ago, I would have said that was brilliant. Things are beginning to improve. The consumer is back. Certainly in Britain the consumer is back and in America as well.”
He said there was also higher levels of trade activity meaning that things were starting to move in the right direction.
He added that the US has understood what was needed to get the economy moving and it has focused on repairing the housing market, which has had a dramatic impact on getting the country’s deficit down.
However a lack of confidence means firms are still hoarding cash, although they have built up considerable funds.
“If you don’t have confidence you don’t spend that money but this January that changed. One hundred billion dollars worth of deals were announced by corporate America.
“Not all of them were completed but it showed the change that happened.”
Urquhart-Stewart refuted claims that in Europe the euro is doomed as a currency because it is more of a political construct than a fiscal one.
However, he said there has to be reform and that we are now seeing deflation raising concerns that countries like France are starting to suffer as Japan has done.
Despite attempts by the European Central Bank pumping money in to kick-start the economy it has had little impact and there needs to be more reform.
But Urquhart-Stewart said there were signs now that some of the peripheral nations like Ireland that have actually sorted out their deficits are starting to flourish.
For Britain a number of uncertainties remain like our relationship with Europe, devolution after the Scottish referendum and next year’s general election.
But he said:”Actually something is going on in Britain I find quite fascinating. Despite the fact we have a hobbled banking sector, a cynical media, some politicians with no experience there are things going on I find quite encouraging.”
Urquhart-Stewart said it was a myth that Britain didn’t manufacture anything, saying it remained the world’s eighth largest manufacturer, although he said the sector was never the be-all and end-all for the economy.
Last year 522,000 new start-ups were created, he said, compared to the 180,000 a year that was the case when he was a boy.