Economy

Investors pull back from UK as economic gloom deepens

Britain has emerged as the most unpopular market worldwide among leading fund managers, as growth stalls and inflation lingers following Chancellor Rachel Reeves’s Budget.

A monthly survey by Bank of America reveals the UK is the least attractive country for investors, ranking below bonds, cash, energy and utilities in terms of appeal.

The findings come amid signs of a fragile domestic economy. Recent data showed GDP inching up just 0.1% in the final quarter of 2024, driven predominantly by a rise in government spending. The private sector, by contrast, contracted over the same period, and business investment has plunged since the Budget’s £25bn raid on employers’ National Insurance contributions.

Elyas Galou at Bank of America says the data illustrate a textbook case of “stagflation” in the UK: subdued growth coupled with stubbornly high 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.

Global investors are increasingly drawn to the US and the eurozone, with the UK experiencing outflows of $129bn since the Brexit vote in 2016, nearly half of the total assets managed by UK equity funds. Over the same period, US equity funds attracted $1.1 trillion in fresh money, underscoring a massive pivot away from Europe—particularly Britain.

While the Government aims to court foreign investment to spark long-term economic expansion, sentiment remains entrenched in negativity. The Chancellor’s recent visit to China and rekindled trade talks with India highlight Whitehall’s push to draw international capital, yet renewed faith in Britain’s growth story remains elusive.


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