Investments expert Caspar Rock gave a “gloomy outlook” on the coming year’s global economy, predicting recession in the developed world.

Mr Rock, chief investments officer at Schroders Wealth Management, delivered the grim assessment at the Schroders Bermuda Investment Seminar at the Fairmont Hamilton Princess & Beach Club.

“It will be worse in Europe than in the United States,” Mr Rock predicted. “The nearer you are to the Ukraine, the tougher it will be in the next 18 months.”

But he said the jury was still out on how deep and how long the recession would last.

He said the key driver will be European energy, especially the cost of gas.

“Germany and Italy have been importing huge amounts of gas from Russia and are now struggling to find it from somewhere else,” Mr Rock said. “That is going to lead to real recessionary problems in Europe.”

He expected interest rates to be higher in Britain than in the US.

“That is a big change,” he said. “The US will be peaking somewhere between 4 and 4.5 per cent by this time next year. That is a hell of a sea change from what we had a year ago. That is why we have seen all the bond and equity markets in turmoil because the opinion has clearly changed.”

He said the cost of living is starting to impact the general public with consumer confidence in Britain “rolling over”, and British people buying less clothing.

Mr Rock dismissed analyst forecasts that showed positive earnings for next year.

“I think that is unrealistic,” he said. “Given what I have been saying about a recession and pressure on the consumer, and business, that does not say profits will be up next year. We are watching closely for the shoe to drop. Until the shoe has dropped, it is not right to add risk in portfolios. There is better value in government bonds.”

He said a lot of countries are now looking at becoming more energy independent. He said the cost of renewable energy has “collapsed” in the past couple of years, and there has been huge growth in the solar power and electric-car industries.

“In the United Kingdom, about 30 per cent of all car sales are now electric,” he said. “That is a real change in the last two or three years.”

Also at the seminar, Robin Peters, client director, wealth management, Schroders (Bermuda) Limited, said the genie that is inflation is now out of the bottle and is considered “stubbornly persistent”.

“It’s the phantom that eats into the purchasing power of our hard-earned money,” she said. “Inflation is here, and it has been creeping up on us for months. It is supposedly transitory, despite 40-year highs across various measures.”

She said in March the Federal Reserve decided it was time to do something about inflation.

“A gentle and highly criticised increase of 25 points was delivered which has now morphed into a relentless series of rate hikes,” she said. “Five moves in six months, 3 per cent for the year to date, to be precise; with more anticipated this year.“