Britain has emerged as essentially the most unpopular market worldwide amongst main fund managers, as development stalls and inflation lingers following Chancellor Rachel Reeves’s Price range.
A month-to-month survey by Financial institution of America reveals the UK is the least engaging nation for traders, rating under bonds, money, power and utilities when it comes to attraction.
The findings come amid indicators of a fragile home economic system. Current information confirmed GDP inching up simply 0.1% within the remaining quarter of 2024, pushed predominantly by a rise in authorities spending. The non-public sector, in contrast, contracted over the identical interval, and enterprise funding has plunged for the reason that Price range’s £25bn raid on employers’ Nationwide Insurance coverage contributions.
Elyas Galou at Financial institution of America says the info illustrate a textbook case of “stagflation” within the UK: subdued development coupled with stubbornly excessive inflation. “When I speak to investors, I often ask when they last heard positive news about the UK. They typically struggle to answer. It’s fundamentally a growth problem,” he notes.
International traders are more and more drawn to the US and the eurozone, with the UK experiencing outflows of $129bn for the reason that Brexit vote in 2016, practically half of the entire property managed by UK fairness funds. Over the identical interval, US fairness funds attracted $1.1 trillion in contemporary cash, underscoring a large pivot away from Europe—notably Britain.
Whereas the Authorities goals to court docket overseas funding to spark long-term financial enlargement, sentiment stays entrenched in negativity. The Chancellor’s current go to to China and rekindled commerce talks with India spotlight Whitehall’s push to attract worldwide capital, but renewed religion in Britain’s development story stays elusive.
