UK investors’ fears and aspirations

IW Capital’s report discovers the true impact of 2016’s triple threat of political shocks and their direct effect on the UK investor community.

Over the past few weeks, Brexit has been the hot topic of discussion. The United Kingdom’s economic resilience in the months following the Brexit referendum and setting of interest rates to a record low has defied initial industry forecasts. After several political and economic shocks in 2016, London-based investment firm IW Capital conducted new research revealing how these significant events affected investment decisions across the nation. With the Bank of England recently upgrading its 2017 growth forecasts to 2%, the nation’s private sector has continued to drive output. This also makes 2017 a key year in which investors should reflect on their financial strategies and how to consider ongoing events. At a more local level there is also the fiscal year to consider – which starts in early April in the UK.

A greater risk appetite

Having surveyed 1,000 UK investors about their fears and aspirations, IW Capital’s report – 2017: The Aspirations, Fears and Priorities of UK Investors – has sought to identify how investors are geared up to managing their portfolios over the next 12 months. The survey showed that 2.21 million investors across Britain have moved into 2017 with a greater risk appetite and are seeking new investment classes. One in ten investors felt the shock of political events of 2016 will influence their investment decisions this year more than any other factor. 36% of investors think record-low interest rates will negatively impact their 2017 investment strategy, with 26% saying this issue is the single biggest risk to their investments.

Positive Brexit, negative Trump

Nearly 11 million people across the UK believe that Brexit will have a positive impact on their investment strategy in 2017. However, 44% of investors are worried about the impact of Donald Trump’s presidency on their investments. Just 27% said they have faith in UK prime minister Theresa May’s capability to promote investment value as part of a post-Brexit government. 3.19 million investors are re-evaluating their investment plans in light of interest rates residing at 0.25%. And 27% of investors believe entrepreneurs will play a critical role in driving private sector growth.

The government has offered greater clarity to investors and businesses by releasing a series of policy documents, as well as ushering through Brexit legislation. The nation may be in a state of transformation, but it is clear a large portion of investors hold positive sentiment towards Britain’s business community, with 6.62 million stating that Britain’s entrepreneurs and private sector business leaders will continue to drive economic growth.

Historic Events

Luke Davis, CEO of IW Capital, commented: “In 2016, the UK experienced a number of historic political events, the true impact of which is now beginning to emerge more clearly. In a year of firsts, where sizeable political shifts made a notable impression across many financial markets, investor sentiment within the private sector has remained resilient. “It’s interesting to note investors’ plans in light of the slump in interest rates and leadership discontent; transition brings opportunity, and this is reflected in today’s research. With investors looking to new investment classes … there is clearly a huge amount of confidence towards the country’s entrepreneurial capabilities, its resolute private companies and the potential of our innovative high-growth businesses to drive economic growth in 2017.

ABOUT THE AUTHOR
Ridhima Sharma
Ridhima Sharma speaks German and is DACH Correspondent for InvestmentEurope.
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