UK stocks caught in 'doom loop' of decline, warn analysts

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Britain's small and medium-sized companies are trapped in a 'doom loop' that risks destroying a crucial part of the UK's financial ecosystem, analysts have warned.

Article originally published by The Telegraph. Hargreaves Lansdown is not responsible for its content or accuracy and may not share the author's views. News and research are not personal recommendations to deal. All investments can fall in value so you could get back less than you invest.

Published by

01 Nov 2023

Britain’s small and medium-sized companies are trapped in a “doom loop” that risks destroying a crucial part of the UK’s financial ecosystem, analysts have warned.

The pace of decline for listed companies outside the FTSE 100 and FTSE 250 is “relentless”, according to a report published by Peel Hunt.

The investment bank highlighted a 10pc decline in the number of companies on the FTSE’s SmallCap index. This number has declined by 30pc over the last five years.

It said markets are being hit by a swirl of negative factors including low valuations, falling liquidity, investors withdrawing their funds and a lack of initial public offerings (IPOs).

Charles Hall, head of research at Peel Hunt, said: “The pace of decline is relentless and is likely to continue unless effective action is taken quickly.

“We are currently in a doom loop, where valuations are low, liquidity is reducing,