US sub-prime crisis leaves savers with 'nowhere to hide'
05 September 2007
"No one is quite sure" how long it will be before volatility in the markets subsides, F&C Asset Management has warned.
Jason Hollands, Director of the group, said the US sub-prime crisis would encourage people to "start saving more and spending less".
The crisis arose because the US sub-prime mortgage market has been lending to those who could barely afford a mortgage over recent years.
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Millions of people are now defaulting on their payments, which led to plummeting stock prices amid fears of a worldwide economic downturn.
Mr Hollands said the situation was a "double-edged sword".
"There is a scenario where this could have an impact on the real economy, where people will spend less on goods and that will feed through to company profits.
"But the flipside to that is that people may want to start saving up their nest eggs - and the savings ratio in the UK has been at very low levels so there is an up side and a down side for the investment industry."
He said almost every asset class had been affected leaving "no safe places to hide other than cash".
