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.
Jamie Young
Jamie Young is Senior Reporter at Business Matters, covering SME finance, employment law and Westminster policy since 2016. He has reported on every Budget and Autumn Statement since 2018, helped make sense of the 'covid era' and the bounce-back loan scheme from launch through the fraud investigations, and broke the magazine's coverage of the 2024 late-payment reforms. He joined Business Matters straight from completing his BA in Administration from Exeter University and is NCTJ-qualified. Reach him at jyoung@cbmeg.co.uk
