Investors’ confidence in the UK soared in May after being crushed by “awful April” fears about the impact of higher taxes and bills on growth as well as worries over the effect of US tariffs.
A survey of investors by Hargreaves Lansdown (HL) platform found confidence in the UK rebounded faster in the month than almost anywhere else in the world. Investor confidence among HL clients was up 70% compared with April. Confidence in UK economic growth increased at an even quicker pace, rising 85% on the previous month.
The findings came on a day when the FTSE 100 rose 58 points, or 0.7% to 8,776.1 in early trading. London’s blue chip index is now up 6.25% since the start of the year and closing in on all time highs seen in early March.
The pound is also performing strongly against the dollar reaching a three year high of $1.355.
Investors have been buoyed by a run of better than expected economic data including solid 0.7% GDP growth during the first quarter of the year, faster than most City forecasts.
There was also relief when Keir Starmer agreed a trade deal with Donald trump that lifted many of the threatened punitive tariffs on exports such as steel and carts and limited the tariff on most other goods at 10%.
Victoria Hasler, head of fund research, at Hargreaves Lansdown said: “After a terrible month in April, May saw a huge rebound in investor confidence among HL clients. The pause in tariffs, combined with opportunities presented by the fall in markets, saw investor confidence rise across all regions in our survey.
“The UK saw the biggest rise, with investor confidence increasing by an impressive 70% from the previous month. It should be noted that April was a low point for the UK, with the smallest confidence number of any region in our survey but, even so, the rebound was dramatic.
There was also a striking increase in confidence in Europe, up 55% from April. The region in which investors have the most confidence, however, is Japan. This could be linked to the yen’s perceived status as a safe haven, or perhaps the structural reforms which continue to come through in the market and inflation creeping back into the system for the first time in decades.”
Investors remain cautious on the US. Whilst confidence in the North American market did rise, the bounce was much smaller than other markets at just 8%. It seems that investors are still mistrustful of Trump.
