The FTSE 100 seems to have put May's wobbles behind it: there is no shortage of new issues and the stock exchange routinely handles levels of business that would have been considered out of the question a few years ago, says Anthony Hilton in the Evening Standard. But blow away the short-term froth and there is a much less happy story to tell about the direction of British share prices and the UK market's long-term health.
The earnings multiple of the market is currently between 12 and 13, its lowest in a decade. This could be taken as a sign that equities are cheap. Alternatively, it may be a signal that people have lost their appetite for shares, since the figure can also be interpreted as meaning the stockmarket is at a ten-year low. A comparison of the UK stockmarket's performance with those of other mature economies suggests the second explanation is true; since Labour took office in May 1997 it has been one of the most disappointing developed markets.
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