UK-based investors have dumped billions of pounds worth of shares amid Budget tax fears – as London’s new Lady Mayor urged Rachel Reeves not to damage growth.
Fears of capital gains tax hikes and a raid on pension lump sums helped drive £1.2billion in withdrawals from UK-focused equity funds last month.
The figures from funds network Calastone add to the evidence of gloom over the Chancellor’s plans – with separate data also showing consumers cutting back on public spending in advance of the Budget.
Calastone’s figures show the continuation of a long-running exodus from UK stocks stretching back more than four years.
That includes more than £10 billion pulled out since September last year when anxiety was building over Ms Reeves’s first Budget.
Now, investors are responding to fears that she could raise capital gains tax or cut the tax-free lump sums that pension savers can withdraw from the age of 55, from the current level of £268,275.
The Chancellor’s tax plans are causing ‘growing concern’
The flight from UK shares is part of a wider exodus from global stocks, also partly driven by worries of a ‘bubble’ in US artificial intelligence (AI) companies.
Overall, UK investors pulled a record £3.6billion from global and UK funds in October.
Edward Glyn, head of global markets at Calastone, said there was ‘growing concern about Rachel Reeves’ Budget and the anticipated tax implications’.
He added: ‘For some, it’s a simple matter of crystallising capital gains in case rates go up. This drove a huge uptick in selling this time last year and it’s clearly round two in 2026.
‘For many others it’s about pensions.
‘The tax-free lump sum that over-55s may draw from their pensions is such a vital part of most people’s retirement planning that the risk it will be scrapped or drastically scaled back is simply too concerning for many diligent pension savers in their 50s and beyond to contemplate.
‘Speculation on policy has made this drastic step the only rational choice for many, even if it may ultimately harm their longer-term financial goals.’
It came as London’s first Lady Mayor, Susan Langley, urged the Chancellor: ‘Please don’t tax growth.’
Ms Langley told the BBC that the City – which she represents in her new role – was ‘the engine and the powerhouse for the UK’.
She added: ‘We need to make sure that the City’s a place where entrepreneurs want to come, where companies want to grow, where they employ people, where they create innovation.’
Separately, figures from Barclays showed that consumer card spending fell by 0.8 per cent and consumer confidence tumbled last month.
Worries about jobs, the economy and household finances all deepened as many cut back or delayed purchases, the report revealed.
Julien Lafargue, chief market strategist, at Barclays Private Bank and Wealth Management, said: ‘Consumers and businesses alike appear to have adopted a ‘wait and see’ approach ahead of the Autumn Budget.’
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