UK uncertainty has sparked ‘investor strike’

Global investors have become spooked by the level of uncertainty in the UK according to a panel of experts at Utility Week Forum, including Barclay’s Dominic Nash who suggested an “investor strike” was underway.

Nash, head of utilities for Barclays, said there are too many risk factors at play including how long and how deep the recession will last; what bond yields will rise to, which links to cost of capital; where inflation will go; or the decisions government are making that directly impact utilities.

He suggested there is “broadly an investors strike” by global investors because of the amount of risk in the UK. This could be countered by the UK currently “looking insanely cheap”, however Nash said investors lacked faith that earnings would materialise at the rates suggested.

“There’s no clarity,” he said. “The UK has taken a knock and it will take quite a long time to get confidence back.”

However, he reassured the room that this is not dissimilar to the picture playing out across Europe, where other countries are facing their own issues but to a lesser extent when compared to the UK.

Nash appeared beside Nazmiye Ozkan, professor at Cranfield University, who raised concerns that public perceptions of utility companies are so low that profiteering will damage any remaining trust. In terms of addressing the current cost-of-living crisis, she suggested that a windfall tax is acceptable for short term periods of unforeseen circumstances, but other options should also be considered. She said more demand-side management is needed such as mandatory smart meters for households to help them save energy and money.