Ride the global market rebound with bargain British stocks
The Bank of England has expanded its quantitative easing (QE) programme. That bodes well for British stocks – which have not been this cheap compared to their global counterparts since 1973.
![Diageo branded drinks](https://cdn.mos.cms.futurecdn.net/U2VWeVtL23rgZb4MBZqfaH-415-80.jpg)
The Bank of England has expanded its quantitative easing (QE) programme in response to the second English lockdown. The Monetary Policy Committee (MPC) voted last week to buy £150bn more government bonds with printed money, taking the total value of its quantitative easing programme to £895bn, about 40% of 2019 UK GDP. The Bank also forecast that it will be early 2022 before the UK economy returns to its pre-pandemic level.
The Bank’s new bout of bond-buying comes as government borrowing spirals ever higher, says Liam Halligan in The Daily Telegraph. Since March, the Bank has printed “more than three times what we spend on the NHS in an entire year”. Soon it will “own almost half the entire store of UK public debt”. The “historic precedents” for such rampant money-printing are hardly comforting. That such a “dangerous and controversial economic policy” has been undertaken with scarcely any public debate is “utterly mad”.
For now, however, yet more liquidity bodes well for British equities – which have not been this cheap compared to their global counterparts since 1973, as Stefan Wagstyl points out in the Financial Times. There are good reasons for the steep UK discount: the FTSE has a glaring “shortage of tech stocks”. Thanks to Covid our economic performance looks likely to be “among the weaker developed economies” over the next two years, which will hit company profits. Foreign businesses “don’t have to contend with Brexit” uncertainty either. Yet from AstraZeneca to Diageo the UK market boasts savvy global operators. Some of the top blue-chips earn up to 70% of their profit overseas. Things are bad now, says Wagstyl, but are they really as bad as 1973 when “strikes... and power cuts” left me “to do my homework by candlelight”?
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
![https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg](https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748-320-80.jpg)
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
-
Tesla and Alphabet announce results – should you invest in Big Tech?
How profitable are the world’s biggest tech companies? We share the latest so far this earnings season.
By Katie Williams Published
-
How working part-time in retirement could boost your pension by £87,000
Easing into retirement by working a few days a week could add thousands to your pension pot. We crunch the figures to see how working part-time can boost your pension po
By Ruth Emery Published
-
What does a weak yen mean for Japanese stocks?
The Japanese yen has hit its lowest level against the US Dollar since 1986. What does it mean for its stock market?
By Alex Rankine Published
-
UK mid-caps: an improving outlook
UK mid-caps have perked up and the rally may run further, but long-term investors should remain selective
By Cris Sholto Heaton Published
-
The tobacco industry is going smoke-free - how to profit from it
Tobacco companies have realised their traditional products are on the wane. But new opportunities have opened up – and should prove lucrative
By Rupert Hargreaves Published
-
Is it time to invest in creative industries?
Any industrial strategy should not overlook the creative industries, one of our top national assets
By David C. Stevenson Published
-
Is Mercia Asset Management set for success?
Mercia Asset Management helps the government fund smaller companies in Britain’s regions. Should you invest?
By Rupert Hargreaves Published
-
British stocks set for a boost
British stocks are due for a bounce as the UK looks more stable compared to many economies
By Alex Rankine Published
-
Ocado shares jump by a fifth
Ocado takes a turn for the better after attractive profit forecasts were announced
By Dr Matthew Partridge Published
-
The AI boom is on borrowed time
The hype around the AI boom could be on its way out – but why?
By Alex Rankine Published