Sentance, former director of economic affairs at the Confederation of British Industry, told more than 300 FD’s at the Finance Director forum aboard the P&O cruise ship Arcadia, that growth forecasts for the new economy were unlikely to be realised.
With consumers the principle beneficiaries of the increased competition the internet has brought about, Sentance said corporate profits would be squeezed.
‘If you believed some of the more bullish people on this, you would think that the normal rules of economics had been suspended and we were entering a economic paradise,’ he said.
And he warned that old economy stocks may benefit to a greater extent than their new economy equivalent. ‘Investors are beginning to wonder whether technical companies will harness the benefits or whether traditional companies will,’ he said.
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