Taking a global perspective on the UK economy

The UK economy has suffered a double hit, with COVID-19 and uncertainty over Brexit’s impact both taking their toll. That is set to damage the profits of large companies and, in turn, that could mean returns for investors also suffer. In fact, during 2020, returns from the UK stock market were lower than those elsewhere in the world, but that doesn’t tell the whole story.

The FTSE 100 is a collection of the 100 largest companies registered in the UK. That group includes many household names that over the years have been trusted investments for loyal shareholders, particularly those who rely on dividends to boost their income.

Among the companies on that list are the likes of BP and Shell, which sit alongside tobacco companies such as Imperial Brands and British American Tobacco. These are some of the top dividend payers and that’s why that type of company remains a feature of many investment portfolios seeking income rather than growth.

However, although they have their base here, UK companies generate around 70% of their profits from their overseas business activities. As a result, the strength of the pound against foreign currencies is every bit as important as the state of the UK economy. The good news is that, as and when the global economy picks up over the coming years, FTSE companies should benefit.

If you are looking for advice on UK investments, or more generally on wealth management and you’re in Shropshire, we can help you weigh up all of the options.


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