Just 28% of investors believe inflation will be brought under control this year

A new survey of 777 UK-based retail investors has revealed how the current economic climate is impacting their investment plans for the next 12 months. It found:

• Just 28% are confident that inflation will be brought under control this year
• Two in five (40%) are too nervous to make new investments in the current climate
• 42% plan to adopt a conservative investment strategy in 2023
• 22% will be forced to liquidate their investments if the cost-of-living continues to climb

UK retail investors are uncertain about making any sudden investment moves in 2023 due to concerns about persistent inflation and the spiralling cost-of-living, new research commissioned by HYCM has revealed.

The trading broker commissioned an independent survey of 777 UK-based investors, all of whom have investments in excess of £20,000, excluding the value of their residential property.

It found that just 28% of investors have confidence that inflation will be brought under control this year. A further two in five (40%) are too nervous to make investments in the current high inflation, low growth economy.

22% voiced significant concerns over the cost-of-living, claiming they will be forced to liquidate their investments if high living costs continue to escalate. This figure rises to 43% amongst those 18-34.

HYCM’s survey uncovered that 42% plan to adopt a conservative investment strategy, focusing on security rather than returns in 2023, with this figure rising to 55% in the 18-34 demographic.

One third (33%) plan to target their investments specifically to sectors they think will be resistant to the recession, with this figure rising to 52% amongst the youngest investors surveyed.

Currently, just under half (49%) of the respondents surveyed have investments in stocks and shares, property (31%), and fixed interest securities (29%).

When surveyed about their plans for 2023, the majority (67%) of investors are planning to hold their position on fixed interest securities, with 63% of thoes with investments in stocks and shares and 56% of those who have invested in gold also looking to maintain their position. Overall, a further 23% plan to add more stocks to their portfolio.
 
Giles Coghlan, Chief Market Analyst, consulting for HYCM, said: “Although inflation has somewhat eased over recent weeks, with the most recent CPI figures still standing above 10%, HYCM’s research indicates that UK investors are fearful that the spectre of inflation could stick around in the long-term.

“Inflation is a beast that eats away at hard-earned savings and plays havoc with domestic budgets – the idea that it could become entrenched is something the Bank of England wants to fight. But after a difficult couple of years, even with further interest rate hikes in the pipeline, many investors remain concerned about an imminent recession. Naturally, this is translating into cautious investment practices – however it is encouraging to see that a good portion of investors are looking to fight the fall by buying the dip.”