So its the day after Budget Day and the headlines are already rolling in about weak growth, cost-of-living pressures, tight government finances… you know, the usual ray of sunshine. And understandably, people start wondering whether this gloomy picture means the UK stock market is in trouble too.
But then they look at the FTSE 100 and think… hang on a minute. It’s up over 20% this year. How can the market be booming when everything we hear about the economy sounds so tough?
Here’s the twist: the FTSE isn’t really a reflection of Britain’s economic health. Not even close. It’s like judging a country’s wellbeing based on how well the Manchester United kit sells in Asia — related in theory, but it doesn’t tell you much about what’s happening in the high street.
Less than a quarter of the revenues of FTSE 100 companies come from the UK. That means more than 75% of the money these businesses make comes from outside our shores. So even if British consumers are tightening belts, most of the companies in the index are selling to people in America, Europe, India, China and everywhere in between.
A few examples bring this to life:
- British American Tobacco actually earns almost no money from Britain — a relief for the NHS if nothing else.
- HSBC may be headquartered here, but it cares far more about Asia, where billions of customers live.
- And even the National Grid earns more from powering homes and businesses in places like New York State than it does from the UK
The FTSE may have a Union Jack draped over it, but underneath it’s a very global beast.
This setup has been a big advantage in 2025. While the UK economy has been grappling with political change and a cost-of-living hangover, big global sectors like energy, banking and healthcare have continued to perform strongly. These companies may not be glamorous, but they tend to make dependable profits and pay attractive dividends — which is exactly what investors like during uncertain times.
There’s also the small matter of value for money. Compared to the US, where some share prices have been inflated by hype and AI excitement, UK stocks have looked cheap. Bargain prices attract buyers, and that alone pushes markets up. Add in the fact that a weaker pound boosts the value of overseas earnings, and you have a recipe for a rising FTSE even when domestic news looks a bit grim.
So why does the economy still feel so fragile if the stock market is in such good spirits? Because the economy we all experience on a daily basis — shops closing, mortgage rate pain, cautious spending — is driven by British households and British businesses. That’s a very different picture to the FTSE, which is driven by multinational giants serving customers across the globe.
In other words, a strong FTSE doesn’t mean everything is fine at home. But it does mean globally diversified portfolios have continued to benefit — which is exactly why advisors (like me) always push the importance of not having all your eggs in the “UK-only” basket.
It’s a helpful reminder too: your investments aren’t the economy. They’re a long-term plan tailored to your goals. So, when the headlines start shouting about recessions or political chaos, and then the market does the opposite of what everyone expected… that’s not a glitch. That’s how markets work.
Yesterday’s budget will no doubt generate a tornado of opinions and predictions. But if you’re invested globally — including through the FTSE 100 — you’re already plugged into the opportunities that exist far beyond the UK’s borders.
And if all this leaves you wondering what your portfolio is actually exposed to — how much is domestic, how much is global, and whether it’s positioned for the world we really live in — let’s talk. I’m always happy to review where your money is invested and help you make sure it’s working hard for your long-term goals.
Feel free to get in touch if you’d like some expert guidance or a fresh set of eyes on your investment strategy.
