The founding partner of Odey Asset Management said in a letter to investors last week that the shares will come under pressure after the FTSE 100 share index climbed 30 percent over five years even as earnings fell by 80 percent.
"We are now destined to have a recession in the U.K. as well as inflation. It will be difficult for the stock market to remain above all of this," said Odey in the letter.
Odey, who supported the vote to leave the EU, made the calculation. He also said the Bank of England must be rising interest rates, not cutting them, as it did in August after the vote result.
"What the UK is promising is rising wages, recession, inflation and falling profits. Not exactly the prize that ticket holders in the FTSE and the gilt market have paid up for," said Odey. "On the back of the uncertainty for overseas investors in UK PLC following on from the Brexit result, the current account deficit is ballooning and the budget deficit is following."
Since the Brexit vote, the FTSE 100 share index has mounted almost 10 percent as a feebler pound collapsed to nearly 20 percent against dollar since June boosting exporters. Odey said currency weakness could cause to the inflation rate ascending above 3.5 percent.
Britain's yearly consumer price inflation rose to 1.0 percent in September from 0.6 percent in August. The Bank of England lessened the interest rates in August for the first time since 2009 to help bolster the economy after the Brexit vote.
Crispin Odey has been a vocal critic of quantitative easing. He said that the Bank of England Governor Mark Carney is really under pressure and should be raising interest rates, but it now looks as though a rise in interest rates will be over his metaphorical dead body.
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