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Investors believe UK recession is genuine threat

20/03/2008

The threat of recession is a real fear for both investors and the general public, according to a new survey.

Research from the Association of Investment Companies (AIC) shows that stock market upheavals and the continuing credit crunch are concerning both active investors and the general public.

AIC found in its latest investor confidence index that 37 per cent of active investors believe a recession is the biggest threat to their finances, with 26 per cent most concerned about a stock market crash.

Annabel Brodie-Smith, communications director at AIC, said: "The credit crunch and recent market volatility have created a trying time for investors and it has led to a fall in investor confidence.

"The biggest financial fear for all investors is a recession and the UK's love affair with property is coming to an end."

The general public mirrors this sentiment saying their greatest fear for their finances in the next six months is also recession (24 per cent), followed by an interest rate rise (17 per cent).

With concern over the credit crunch and fears over an impending recession, over a quarter of both active investors and the general public are changing the way they manage their money with 28 per cent of the general public and 26 per cent of active investors decreasing their spending and saving more each month.

Investors are also changing where they put their money, with the majority of active investors questioned saying equities would produce better returns than the UK housing market (52 per cent), an improvement on last year when 43 per cent were of this opinion.