Terry Smith: global economy is at risk of stumbling

One of Britain's best-known fund managers, Terry Smith, sees tough times ahead for the global economy.

Terry Smith,who runs theFundsmithEquity Fund andthe FundsmithEmerging EquitiesTrust, has becomeone of Britain'sbest-known fundmanagers overthe last few years. He is known forhis focus on high-quality companies,arguing that the long-term prospectsof truly exceptional businesses aregenerally undervalued by the market.

Smith is not particularly optimisticabout the outlook for the economy, and thinks that central-bank interest rate rises could easily lead to arecession, he tells Citywire.co.uk. Paradoxically, this would be goodnews, since inefficient firms wouldbe "allowed to go bust and washthe beach clean". He also believes that current policies may be hurtingdemand.

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