Andy Burnham's "costly" policy agenda and the renewed threat of inflation are impacting investor confidence in the UK, according to Berenberg's Investor Barometer. The survey, which polled 300 international investors managing a combined $1 trillion, found that 40 per cent cited policy decisions as the primary risk to Britain's economy.
Andrew Wishart, Berenberg's chief UK economist, noted that Prime Minister Andy Burnham's initial ambitions kept government policy at the forefront of investor concerns. He added that concessions from Burnham and the Chancellor regarding higher spending offer some reassurance against a major policy error.
Investors also voiced increased worries about inflation's impact on UK growth. The number of asset managers concerned about the pace of price rises, which remains above the Bank of England's two per cent target, has doubled. Inflation is projected to exceed four per cent early next year, driven by higher energy costs from the Middle East conflict.
Separately, the survey indicated diminishing expectations for London's IPO market. Just 32 per cent of money managers expect IPO activity to increase in the next 12 months, a decrease from 63 per cent six months ago. Despite this, appetite to participate in large IPOs has risen, particularly among UK portfolio managers.