Globe

The market has been relatively calm in recent weeks given that Greece is unlikely to reach agreement with its European Union partners over its debt burden anytime soon, according to Chief Investment Officer Haig Bathgate.

The country's loan agreements are about to expire and the Syriza government is walking a tightrope in not antagonising its European partners while at the same time keeping its promise to the electorate to rein in austerity policies – bearing in mind that the Greek electorate are overwhelmingly in favour of retaining the Euro. The issues arise from the new Greek government having neither the experience or the contact network across the EU who can influence behind the scenes to help it with its current predicament. Ultimately there is likely to be a resolution, but there is likely to be a lot of debate and positioning from both sides before that happens.

Haig, speaking on BBC Radio's Good Morning Scotland, also spoke about prospects for Centrica before the energy company announces its earnings this week.

 

LAURA MACIVER

The CBI has upgraded its forecast for the UK's economic growth this year, the business organisation now expect the UK economy to expand by 2.7% in 2015, this is compared to its November forecast of 2.5%. It credits a combination of low inflation and improvements in employment for the increase, however it's warned that volatility in the Eurozone, including Greece and the Ukraine, is still a risk to growth; and on the subject of Greece Eurozone finance leaders are to meet later today to discuss a deal with the Greek Government. Haig Bathgate of Turcan Connell in Edinburgh joins us now to discuss this and the rest of the markets news. Good morning to you, Haig.

HAIG BATHGATE, TCAM

Morning, Laura.

LAURA MACIVER

So to those Greece talks first - a lot of discussions have already been held over the last couple of weeks since the election but this is the real thing today.

HAIG BATHGATE

Yes, that's right and obviously with the Eurozone finance ministers and the Greek Government meeting to try and resolve the position I think the problem, as with everything in the Eurozone, is all these debates effectively take place in a very public stage through the media and there's really no incentive for either side to roll over early, so our view on this is that the markets have been quite complacent to date, it's unlikely to be resolved today and this could turn into quite a big feature in the coming weeks.

LAURA MACIVER

But the pressure is really on now because if there's no agreement soon the current loan agreements expire, don't they?

HAIG BATHGATE

Yes, that's right and that's in nobody's interest and obviously we've got the new Greek Government trying to negotiate a deal, they've got a very fine balancing act, the Greek electorate have made it very clear that they want to remain within the Eurozone and continue to use the euro but on the other hand they don't want to have big austerity being imposed on them, so there's a lot of pressure on the Greek Government; and the other problem that the new Greek Government have is that they don't have the links within the Eurozone that the new democracy, who were the former party in charge, because they just have a general lack of experience relative to the previous party, so again I would say that the markets are quite complacent about how this could end up and it's likely to get quite tense over the coming weeks.

LAURA MACIVER

Better news from Japan, it's emerged from recession but the growth there still below forecasts.

HAIG BATHGATE

Yes, that's right, the initiatives undertaken by the Abe Government in Japan have helped reduce the value of the yen, which is great for exporters who are clearly making record levels of profitability on the back of that, however it does make imports more expensive, we've experienced that a lot in the UK, and really what they're trying to do is improve confidence and get the consumer to spend in Japan and there's little evidence that that's happening in a sustained basis at the moment.

LAURA MACIVER

And here in the UK, Haig, Centrica results are due later this week, the parent company Scottish Gas has already said that it expects to have been impacted by milder weather.

HAIG BATHGATE

Yes, a combination of things hitting Centrica, the warmer weather meaning there's less demand for gas and at the same time we've got the competition authorities who are reviewing whether the environment is really favouring the consumer in any way, shape or form and on top of that a very competitive market, so they've been losing customers, around about a quarter of a million in 2014 alone, so markets are looking to see whether there is any sign that the dividend might be cut from Centrica today.

LAURA MACIVER

Haig, many thanks. That was Haig Bathgate there of Turcan Connell.

 

This content was generated prior to Turcan Connell Asset Management Limited operating as Tcam.