As the race for No.10 intensifies and Andy Burnham sets out his vision for the UK’s economic future, new polling from Rathbones suggests investors are increasingly concerned about the country’s economic and political outlook.
In a snap poll* conducted by Rathbones, 42% of investors identified economic growth as their biggest concern for UK markets, closely followed by political uncertainty (41%).
These concerns ranked well ahead of interest rates and inflation (11%), despite renewed cost-of-living pressures following the conflict in Iran, which pushed up oil and energy prices.
“Recent conversations with clients have been dominated by questions about what the race for No.10 could mean for their portfolios. They are less concerned about day-to-day political drama and more focused on the potential implications for capital gains tax. Taxation more broadly, pensions and and other areas of financial planning.
While political uncertainty can create short-term market volatility, it’s important not to lose sight of the bigger picture. The strongest defence against uncertainty is diversification. By spreading investments across different regions, sectors and asset classes, investors can reduce their reliance on any single economy, market or political outcome.”
Elizabeth Hart, Senior Investment Director at Rathbones
While investors’ concerns closer to home are dominated by economic growth and political uncertainty, their focus shifts overseas when considering global markets.
Geopolitics are the biggest concern for investors when considering global markets over the next 12 months, cited by almost half (46%). This was followed by concerns about an economic slowdown or recession (23%), and market valuations, particularly in AI and technology stocks (20%).
“Investors are right to keep a close eye on geopolitical developments. Events in the Middle East and ongoing trade tensions have the potential to create periods of volatility, particularly if they disrupt global supply chains or fuel inflationary pressures. However, history shows that markets can often prove more resilient than many expect, even during periods of heightened uncertainty.
“At present, corporate earnings remain strong and the global economy continues to grow, albeit at a slower pace in some regions. While geopolitical risks warrant careful monitoring, investors should avoid allowing headlines alone to drive investment decisions. Maintaining a diversified portfolio and focusing on long-term objectives remains the most effective way to navigate uncertain market conditions.”
John Wyn-Evans, Head of Market Analysis at Rathbones
