Overseas investors have withdrawn over $365 billion from the United Kingdom since February 2014. The massive capital flight is caused by concern over the domestic political landscape. Besides, large sums from Russian investors are vanishing due to the economic sanctions. Logically, the rapid withdrawal of investments has triggered fears about the strength of the pound sterling on Forex.
“The survey certainly showed money leaving sterling … It’s either UK investors wanting to get into foreign assets, or foreign investors wanting to get out of the UK,” said Mike Howell, the chief executive at CrossBorder Capital. From his viewpoint, the cash outflow is driven by three main factors such as Russian and Ukrainian instability, the Scottish referendum and the fear of post-election uncertainty.
“Low yields of government guaranteed securities are explained by the likelihood that elections could be won by the Labor party, and government borrowing will increase by £20 billion a year,” stated Simon Peck, a strategist at the Royal Bank of Scotland. “London is well-known as a Russian investment hub, Russian tycoon started to withdraw their investments last year after sanctions had been imposed by the West due to Moscow’s stance in Ukraine’s conflict. The situation got worse in December when President Putin ordered oligarchs to return their funds to Russia,” the analyst made a comment.
