It’s time to back Britain’s stock markets

In late 2021, as post-pandemic inflation stayed high, bond markets signaled the end of over a decade of ultra-loose monetary policy. (Source: FT Adviser)

Two-year gilt yields, highly sensitive to expectations for UK interest rates, began rising a significant and prolonged shift away from growth stocks.

The Russian invasion of Ukraine added further inflationary pressure, extending the downturn. Valuations fell across both public and private markets, but the impact was especially severe on AIM, which dropped 50% from peak to trough before bottoming on April 7, 2025.

Alternatives to US equities

Rising political risk and stretched valuations pushed investors to look beyond US stocks. Undervalued and long overlooked, UK markets came back into favour.

Renewed interest lifted the FTSE 100 to record highs in February. The stronger sentiment spread to smaller companies, with the FTSE AIM All-Share and FTSE UK Small Cap rising 18.6% and 26.9% over the year to February 28, 2026.

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It’s time to back Britain’s stock markets

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It’s time to back Britain’s stock markets

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