Neptune's Martin: UK faces horrible combination of clouded outlook and high valuations

Concerned about Brexit and weaker pound

Mark Martin, head of UK equities at Neptune IM and manager of the £583m UK Mid Cap fund, remains very cautious in his outlook for the UK economy, pointing to slowing momentum in the housing market and uncertainty surrounding the Brexit negotiations.

Commenting on the housing market in particular, Martin said builders had hugely benefitted from the government's stimulus package as a result of quantitative easing, but warned those tailwinds could soon become headwinds. These would be triggered if the Bank of England began to raise interest rates, the manager said, which could cause increased fragility not only in the housing market, but the UK economy as a whole. This month, the BoE's decision to maintain rates at 0.25% was backed by five MPC members, but three policymakers voted for a rate hike to combat rising inflation.  Howe...