UK investors looking away from deposit accounts
While the last 18 months saw a significant amount of investment funding switched from both property and stock markets into cash, there are signs that investors are looking to switch back. As UK base rates have fallen from 5% down to 0.5% there has been a significant reduction in interest payments received from cash on deposit. While opinion is split as to whether UK base rates will go any lower in the medium term, it would appear that some investors are now looking to pick up "cheap stock" in the stock market with suggestions that property investment could also benefit.
There is no doubt that as UK investment markets continue to fall, in line with interest rates, there will come a point when more and more investors will look to switch out of cash into the stock markets and/or the UK property market. While there are tentative signs that this is now ongoing it is too soon to call a recovery in either the UK economy or UK investment markets in general.
At some stage, as the weight of funding switching from cash into other investment markets increases, we should start to see a gradual recovery in the UK economy. As we have mentioned on a number of occasions, the current economic downturn is like nothing ever seen in recent times and nobody knows when it will end, how it will end and how bad it will actually get.
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