The UK remains cheap but shows signs of becoming liked - if still not loved - by investors as we head into 2025. After 41 months in a row when they deserted UK markets with net outflows from stocks, we finally saw a net inflow in November. That has perked up some interest, even excitement, among pundits.
The Labour government won a decisive election victory last summer and the prospect of political stability for the next five years, and a growth agenda that includes a huge housebuilding programme, may also bode better for the economy. That needs to be balanced against Sir Keir Starmer and Rachel Reeves' shaky economic start, with a dose of pessimism and unpopular Budget dished out and getting blamed for a flatlining economy. Below, finance experts look at how the FTSE indices have done versus global competitors in 2024 and what lies ahead for UK markets, come up with a hopeful prediction for the pound. And we asked our experts to pick some UK stocks worth watching next year. Chancellor Rachel Reeves: Does the prospect of political stability for the next five years and a growth agenda bode better for the economy Value and income-seeking contrarians might give the UK a closer lookThe FTSE All-Share’s advance in 2024 matches last year's progress but pales compared with the major gains achieved by the headline US indices, says AJ Bell investment director Russ Mould - see the table below. 'That profit is supplemented by a dividend yield of 3.4 per cent, share buybacks and also mergers and acquisitions, so the total return from UK equities will still be in the low-double digit percentage range,' he says. Mould points out that this result handily beats inflation, government bond yields and returns on cash. How did major world markets do in 2024? Compiled by AJ Bell 'The takeover activity witnessed in the UK again hints that there is value to be found, especially as many deals have been done at a big premium,' he say