Investor sentiment falls on government recovery plans

Debt to GDP ratio doubled since 1970s

clock • 1 min read
Investors are losing faith in the UK Government's ability to handle the economy post-pandemic
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Investors are losing faith in the UK Government's ability to handle the economy post-pandemic

UK-based investors are losing faith in the government’s ability to rebuild the economy following the pandemic, HYCM research has found.

The survey of nearly 1,500 investors with investments of more than £20,000 excluding property, savings and workplace pensions, found that 60% do not believe Prime Minister Boris Johnson and the Conservative government have handled the pandemic properly.

An additional 59% said they lack faith in the government's ability to tackle the record levels of public debt that was accrued during the coronavirus pandemic, while half of UK investors said they are concerned about the potential of acute economic austerity over the coming years.

"As recent policy reforms would suggest, the government is already taking significant action to repay the large level of public debt accumulated during the pandemic. Consequently, the UK is now approaching an interesting juncture when it comes to its post-pandemic recovery - and clearly, some investors are worried," said Giles Coghlan, chief currency analyst at HYCM.

"Given the fact that recent changes have little precedent outside of a Budget, our research shows that a large number of investors are faltering when it comes to their trust in Boris Johnson's Government. The UK's debt to GDP ratio has almost doubled since the 1970s and is well above the European average. Investors will be mindful that the UK now owes more money than it prints."

He added that despite the uncertainty, some analysts are predicting that the FTSE 100 could potentially offer better value for medium-term investors when compared with US stocks.

"With numerous changes already in the offing, from taxation reforms to national insurance policy overhauls, traders and investors will no doubt be adjusting their strategies accordingly. Investors should monitor any developments closely before making any hasty changes to their portfolio."

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