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Is it a good time to invest in the UK?

28/06/2024

Over the last year or so, headlines have been dominated by talk of foreign investors pulling out of the UK, looking for somewhere more stable to invest. 

However, recent research reveals that confidence in the UK stock market could be on the up. So, could now be a good time to invest in the UK?

 

Investor confidence levels are high

Every month, Hargreaves Lansdown publishes the results of their investor confidence tracker. While the overall UK confidence score was slightly lower for May than for April (95 compared to 101), it still represents the highest level of confidence in the UK since January 2022.

In the last few months, the FTSE 100 has also bounced back, reinforcing the latest confidence index results. This is in part thanks to high exposure to US dollar earners, and also because of oil price rises (BP and Shell alone make up approximately 13% of the index). But are there any other signs that the UK is recovering?

 

Wider economic growth

In the last two quarters of 2023, the UK economy shrank. In the first quarter of 2024, it grew by 0.6% – the fastest growth rate of any quarterly period in the last two years. 

In fact, the Office for Budget Responsibility has predicted that the economy will grow by 0.8% overall in 2024, believing that real household incomes will recover and that interest rates will fall to bring this growth. With inflation also continuing to fall, this could potentially be good news for UK stock growth. 

A fall in interest rates could also potentially trigger more mergers and acquisitions. Dealogic claims that UK M&A bid values are at their highest since 2018, with this year already seeing some sizeable bids and confirmed deals. Could the interest rate cut that we are expecting this summer lead to more M&A activity? 

 

“Stable Rise Limited is not authorised or registered by the Financial Conduct Authority. The marketing materials are not intended to provide financial advice nor promote any individual financial products.”

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