Geopolitical uncertainty is deterring would-be investors and prompting existing savers to retreat into cash, despite warnings that stepping back from equities risks missing long-term gains.
Rising instability in the Middle East is discouraging millions of Britons from entering the stock market, according to new research from comparison site Finder, highlighting the challenge facing policymakers attempting to steer savers away from cash.
The study suggests that one in four UK adults (25 per cent) who do not currently invest are now even less likely to begin, while 10 per cent of existing investors are considering scaling back exposure and moving funds into cash savings.
Overall, more than a third of adults (35 per cent) are now less inclined to invest as a result of heightened geopolitical tension.
By contrast, 18 per cent say they are more likely to invest or increase their market exposure, with a smaller cohort of “buying the dip” investors seeking to take advantage of volatility. Around 35 per cent of current investors, however, report they are maintaining their existing strategy without change.
The findings underscore the behavioural headwinds facing government efforts to deepen participation in UK equity markets, including proposals to reduce the attractiveness of cash ISAs in favour of stocks and shares.
At present, 34 per cent of respondents said they are more inclined to place money into interest-bearing cash savings accounts amid global uncertainty, reinforcing the appeal of perceived capital protection during periods of instability.
Yet analysts warn that attempts to time an exit from markets can prove costly over the longer term.
Data cited by Finder shows that an investor placing £10,000 into the FTSE 100 on 7 March 2022—shortly after the escalation of the Russian invasion of Ukraine—and holding until March 2026 would now have £14,553. Waiting for a recovery in sentiment before investing would have left them with £13,437 over the same period.
The gap reflects the tendency for markets to rebound before confidence returns, meaning those waiting on the sidelines risk missing early gains in recovery phases.
George Sweeney said investors should expect uncertainty as a permanent feature of markets.
“Anyone considering investing should recognise that there will always be reasons to delay,” he said. “A long-term investment journey is rarely plain sailing, and market volatility is simply part of the price of entry.”
He added that history shows markets are broadly resilient to geopolitical shocks over time, with some of the strongest gains often occurring in the early stages of recovery.
For many households, however, the immediate instinct remains defensive: in times of crisis, cash continues to feel like the only truly safe option—even if history suggests that caution can come at a long-term cost.
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