Global investors are “still willing” to invest in the UK economy despite ongoing concerns about growth, according to the Autumn 2026 Berenberg Investor Barometer.
The Barometer, a survey covering 300 global investors representing over $1trn in AUM, reveals a mixture of sentiments. Some 58% of investors are confident the UK will experience “strong to moderate growth” over the next 12 months, down from 67% in the spring.
By contrast, 43% believe the UK economy will contract or stagnate, up from 33%. Confidence in a market recovery has also fallen, with just 32% of global investors predicting an increase in IPO activity over the next 12 months, a sharp decrease from 63% in spring. A slim majority, some 56%, expect activity to remain at current levels.
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Investors cited ‘policy missteps’ as their biggest concern, with 40% noting government policy as their single largest concern, which is unchanged since spring. An additional 16% consider inflation to be the largest risk, an increase on the spring barometer’s 6%.
Matthew Armitt, co-head of UK investment banking, said: “Policy mistakes remain investors’ biggest perceived risk to growth. That is particularly striking given the sharp rise in concerns around inflation and continued geopolitical uncertainty.
“Investors are clearly looking for greater confidence and clarity around the country’s long-term fiscal and policy direction.”
Despite these issues, 89% of respondents believe earnings will meet, or beat, consensus. Of all respondents, 49% anticipate that earnings will remain in line with consensus, with 40% concluding that “better than expected” is the likeliest outcome – only the remaining 10% forecast weak earnings.
With this continuing confidence, it is little surprise that investor appetite for UK equities remains strong. Some 34% of investors plan to increase their exposure over the next 12 months, versus only 10% who plan to reduce exposure.
IPO investor appetite has also risen, particularly among UK portfolio managers: 24% of investors report a strong or very strong appetite to participate in UK IPOs, up from 16% in the spring. Among UK-only mandated portfolio managers, this rises sharply to 51%, up from 34%.
Piers Hillier, CIO of Jupiter Asset Management, said: “UK valuations remain low both to history and other markets, evidenced by the current M&A activity, buybacks and capital returns.
“The UK market has actually been highly divided: large international companies and areas such as mining, defence and financials have performed strongly while many domestically exposed companies have been overlooked.
“We are also seeing the composition of the UK market beginning to change, with the current pipeline of companies looking at listing in London, and a credible IPO revival could make the FTSE a more varied opportunity set for active investors.”
Louise Dudley, portfolio manager for global equites at Federated Hermes, pointed out that many UK-listed companies continue to derive a significant portion of their earnings from overseas. As such, she said the investment case for the UK is “often driven more by global revenue exposure than by the domestic economic outlook”.
“In the UK we view the opportunity set as primarily stock-specific rather than sector-driven. We favour companies which exhibit a broad range of attractive characteristics relative to peers including high-quality businesses with solid standards of governance,” she said.
“Across many UK companies we continue to see share support from increased shareholder returns, particularly through buybacks, alongside strong balance sheets, and healthy cash generation.”
Dudley said, more broadly UK financials – in particular wealth management firms – remain attractive given structural growth prospects and capital efficiency.
“From a valuation perspective, UK companies continue to trade at a discount to global peers, the same valuation discount shared by many continental European peers, which is attractive to investors and does sometimes translate into increased takeover interest, and the potential for companies to transition to a US listing in pursuit of a higher valuation.”
