Gloomy investor sentiment towards British stocks will not last forever. While investors are mostly emotionally driven people who will happily follow the stock market herd in the short run, hard facts are sure to convince them to buy UK shares over the longer term.
Inflation is proving to be a difficult beast for the Bank of England to tame. While it has almost halved over the past six months, annual inflation still stands at twice the Bank’s 2pc target. And after a rise of 0.1 of a percentage point in December, against expectations of a fall of the same magnitude, investors are becoming increasingly concerned that inflation could prove to be stickier than first envisaged.