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Reeves’s Budget triggers stock market exodus twice as big as Brexit
British investors pulled £6.71bn out of global trading last year
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Tom Saunders. Tim Wallace Deputy Economics Editor
07 January 2026 8:00am GMT
Months of
pre-Budget anxiety triggered a stock market exodus twice as big as the shockwave from Brexit, new figures show.
UK investors pulled £6.71bn out of global stock markets in 2025, according to investment firm Calastone.
It was the highest annual outflow across data going back 11 years and was more than double the previous record of £3.34bn set in 2016, the year of the Brexit referendum.
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Then, investors pulled money amid uncertainty over which way the vote would go and how it would impact stock markets.
The rush to dump stocks came in the second half of 2025 with December marking the seventh straight month of net sales. Investors pulled £10.57bn between June and December, reversing net contributions earlier in the year.
Edward Glyn, the head of global markets at Calastone, said the stampede was the result of panic ahead of the Budget. The unusually long build-up to November’s fiscal statement was punctuated by repeated leaks of possible tax increases and about-turns on policy.
Investors feared a rumoured clampdown on the tax-free pension allowances and a further increase in capital gains tax, though neither measure ultimately materialised.
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Mr Glyn said: “The sudden, dramatic slowdown in outflows between November and December is a clear indicator that months of pre-Budget speculation contributed to the record outflows from equity funds between June and the day of the Budget.”
A net £188m was withdrawn from stock market funds in December, far less than the £812m pulled in November.
Calastone data showed that withdrawals from UK investors ceased on Budget day itself, with cash flowing back into stocks for the remainder of that month.
Reeves’s ‘choices have killed investment’
The figures add to evidence that months of leaks and speculation ahead of Rachel Reeves’s Nov 26 statement did real damage to the economy.
The Bank of England warned ahead of the Budget that “increased uncertainty” about the event was likely to drag on activity until well into 2026. Business chiefs have also blamed the Budget build-up for harming the economy.
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Mark FitzPatrick, the chief executive of St James’s Place, said last month that “kite-flying” prompted savers fearful of a tax raid
to withdraw cash from their retirement pots.
Addressing the Calastone figures, Sir Mel Stride, the shadow chancellor, said: “This shouldn’t come as a surprise. Uncertainty before Reeves’ first two Budgets froze investment and disappointment after both of them drove investors away.
“Her choices have killed investment, weakened growth and cost jobs.”
Investors ‘favouring cash’
While pre-Budget speculation was a major driver of the stock market sell-off, Calastone said wider concerns about valuations also played a part. Fears have been growing about a possible bubble in
artificial intelligence (AI) stocks.
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A record £5.84bn flowed into money market funds and Mr Glyn said this showed “investors favouring the safety of cash, suggesting they perceive equity valuations to be teetering”. Money market funds invest in low-risk assets such as government bonds and cash.
Despite the
FTSE 100 reaching fresh record highs in 2025, British investors pulled a net £9.55bn from UK-focused funds last year. That was roughly equal to the £9.56bn pulled in 2024.
Last year marked the 10th consecutive year of withdrawals from British stocks by UK-based investors.
Much of the flow in and out of equity funds came from regular savings accounts. Outflows came despite attempts by Ms Reeves, the Chancellor, to encourage ordinary savers to put more money into the stock market.
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The Government has backed an advertising campaign to get more Britons investing, supported by the likes of Robinhood and Fidelity, and the Chancellor announced a stamp duty exemption for trading shares in newly listed companies at the Budget.
While UK stocks remained unloved by local investors, global and North American shares fared considerably better. Global and US funds saw inflows of £174m and £107m respectively from British investors in December.
Actively managed equity funds bore the brunt of the outflows, losing £18.9bn of British capital in 2025.
The Treasury was contacted for comment.
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