Wednesday, 6 May 2015

Capital flight from UK?

Is capital fleeing the country as foreign investors anticipate a period of uncertainty after the election?

Crossborder Capital, which monitors current account balances, foreign exchange trades and other money movements said it picked up a $24bn outflow in March.

The firm's chief executive, Mike Howell, says he "has a hunch money is leaving".

On the other hand, there has been a regular outflow over the last 12 months. The drain is partly the result of Russians taking out funds to make sure they aren't affected by sanctions, so it's a big leap to assume any connection with the vote on Thursday.

What is more, Bank of England figures show a completely opposite flow of money in March.

Foreigners spent £28bn buying UK government bonds or gilts in March, after two months of net sales.

The European Central Bank has been busily buying the bonds of Eurozone governments -- part of its QE programme designed to boost economic growth -- and that's made UK investments more attractive.

The Bank of England's stats also show that deposits by non-residents in UK banks increased between February and March.

I am told by people who advise foreign investors in London that they are, nervously, sitting on their hands, waiting see what the election a a June mini-Budget might bring.

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