There is little doubt that events over the past few years and current world developments continue to embroil us in the bad things in life that can really make your mad, as the famous song by the Monty Python’s Eric Idle says. No sooner do we feel that a corner has been turned such as, better than expected growth and falling unemployment figures, than we find ourselves back chewing on life’s gristle. Israel’s war in Lebanon, the USA’s bombardment of Iran and its retaliation against Gulf states together with the (currently unresolved) blockade of the Strait of Hormuz, are crushing our hopes of a swift return to economic stability and growth.
Sadly, the impact of these conflicts is immediate and depressing. The International Monetary Fund has downgraded its forecast for UK growth this year in anticipation of belt-tightening in response to increased energy costs due to the Middle East war; multiple surveys reveal that British CFOs’ business confidence has dropped to levels not seen since Covid with energy costs, inflation and interest rates topping their list of concerns; and GDP has fallen to an 11-month low. People are starting to talk about stagflation.
The result for AIM is that companies are stuck like aircraft at Dubai airport, trundling from the hanger to the runway and back again waiting for a break in hostilities in which to take off. The global economic uncertainty is driving cutbacks to business spending and investment and plans to raise finance are delayed indefinitely.
In addition to these geopolitical crises, the UK Government’s tax regime is seen by some as exacerbating the problem rather than contributing to its solution. It is difficult to see how things will turn out for the best.
Don’t grumble, give a whistle
There are a few positive things that you may have forgotten: The wobble around private credit debt as a counterpoint to the capital markets may attract more companies back to AIM. Failure, or rather the growing fear that more companies financed by private credit debt will fail, may well limit the availability of this source of financing in future.
Private equity firms which many entrepreneurial companies have relied upon for growth finance, are also under pressure to exit their investments rather than continue to flip companies between themselves to mark time until world economies get back on their feet. We could see these firms returning to the capital markets to provide the exits they need to reset themselves and free up capital for their next wave of investments.
We can also expect a new injection of capital into the market as a result of the push by high street banks and other newly authorised entities encouraging their existing and new customers to invest in stocks and shares. Since April 6th, hundreds of thousands of people have received direct marketing invitations to find out more about the market investment options available. A Barclays review of data from a Financial Conduct Authority survey estimated that £610bn was held as cash available for potential investment by people in the UK in 2024. While the investment products on offer and communications setting out the compelling case for retail stock-market investment will need time to develop and mature before the market takes off, if only a portion of the amount estimated by Barclays gets redirected onto the capital markets, it would create momentum and have a stimulating effect.
Although certain industry sectors such as energy, hospitality and supermarkets feel squeezed and are struggling to find a way through UK Government levies and the slow pace of legislative change to invest in the UK as they would wish, this sentiment is not uniform across the market. There are companies in other sectors such as health and wellness that feel confident in their ability to diversify and branch out with new products into their existing (and new) consumer markets. Companies will always succeed if they have a good offering.
Finally, the ongoing wars and geopolitical upheaval highlight the continuing need for safe, stable and regulatory secure markets, like London. Alternative, new financial centres in the Middle East have proven not to be gold and while markets in the USA may be tempting, the volatility of its current economic and foreign policies makes it a substantially greater risk than previously. We should value what we have and play to the strengths of the London market.
As the song says, Life is quite absurd and often seems jolly rotten. Let’s try to laugh and smile and dance and sing rather than feel in the dumps and look on the bright side of life.
This article was originally published in the April 2026 AIM Advisers Rankings Guide. For more information, please contact Joseph Archer.
