Inflation eases to its lowest level in almost two and half years but investors remain negative about the UK economy

As headline and core inflation ease, the Bank of England plays it safe, keeping interest rates steady at 5.25%. Boring Money today confirms new research which shows significant negative investor sentiment towards both the UK and global economies, although sentiment about their investment portfolios remains upbeat.

• In a survey conducted between 23 January and 23 February 2024, 41% of UK fund investors said they thought the UK economy was going to get worse in the next six months. Just 26% thought it would get better.

• Sentiment towards the global economy is also negative, with 41% of investors remaining pessimistic about the next six months, which is unchanged compared surveys over the past year.

• However, investors are much more positive about the anticipated performance of UK stock markets – 35% anticipate the value of the UK market will go up over the next 6 months, and just 21% think it will go down.

Holly Mackay, Boring Money’s CEO, commented:

“Investors have enjoyed a bumper ride, particularly if they have had exposure to buoyant US markets. Despite the hold on interest rates across both sides of the Atlantic, both markets and investors remain upbeat about the potential upside. It’s very interesting to note the difference in what retail investors think about the economy – which is largely negative- and what they think about the potential uplift left in stock markets.

This suggests that any future cut in interest rates could fuel already positive sentiment amongst retail investors, and lead to another push, as investors make a very clear distinction between what they see on the High Street, and what they see in Wall Street.”

Sample size: Survey with 1,023 UK fund investors, conducted in January and February 2024