Nearly one in four active UK retail investors changed their portfolio allocation because of domestic political uncertainty, according to IG's biannual Client Sentiment Study conducted between 9 and 23 June among approximately 1,800 active clients. The survey found that 23% of respondents repositioned investments due to UK political uncertainty, with 42% of that group shifting money from UK markets into international investments and 19% increasing cash holdings. Political uncertainty concern reached 61%, the highest level since IG began tracking client sentiment in January 2022 and 11 percentage points above the December 2025 reading, as the country prepared for Andy Burnham to become Labour leader on 17 July and formally take office as prime minister on 20 July.
IG Survey Shows 23% of Investors Repositioned Portfolios
The survey responses were collected before Andy Burnham secured enough parliamentary nominations to become Labour leader and the next prime minister. The findings captured investor anxiety during the leadership crisis surrounding outgoing Prime Minister Keir Starmer rather than a direct reaction to Burnham's selection. Burnham secured the backing of an overwhelming majority of Labour MPs, leaving no rival able to reach the nomination threshold.
Chris Beauchamp, Chief Market Analyst UK at IG, said the findings showed political anxiety moving beyond sentiment surveys and into investment behaviour. "Our latest research suggests political uncertainty is beginning to influence investor behaviour, not just investor sentiment. Rather than simply expressing concern about the outlook, many retail investors are actively reassessing where they want their money invested."
The survey does not show that nearly one in four investors abandoned domestic stocks. Instead, approximately 10% of the full sample moved some capital toward overseas markets, based on the percentages disclosed by IG. Among the 23% who changed allocation, 42% shifted to international investments and 19% increased cash holdings.
Geopolitical Conflict Overtakes Political Uncertainty as Top Concern
Political uncertainty was not the leading risk identified by respondents. Geopolitical conflict and war became the largest concern, cited by 69% of investors, up from 51% in December. The 18-point increase was the second-largest change among the four principal risks measured by IG.
| Investor concern | June 2026 | December 2025 | Change |
|------------------|-----------|---------------|--------|
| Geopolitical conflicts and wars | 69% | 51% | +18 points |
| UK political uncertainty | 61% | 50% | +11 points |
| Inflation | 53% | 44% | +9 points |
| High interest rates | 38% | 18% | +20 points |
Concern about high interest rates recorded the largest increase, doubling from 18% to 38% within six months. Inflation worries rose nine points to 53%. Government debt concerned 36% of respondents, followed by higher taxes at 35%, government intervention and policy changes at 34%, and supply chain disruption at 31%. Only 5% selected none of the concerns presented by IG.
Beauchamp said investors were navigating uncertainty on multiple fronts. "It's also important to view these findings in the wider context. Investors are navigating uncertainty on multiple fronts, from domestic politics to escalating geopolitical tensions and persistent inflationary pressures. Together, these factors are creating a more cautious investment environment."
International Markets Attracted 42% of Investors Making Changes
Of the 23% who changed their allocation, fewer than half moved toward international markets and fewer than one in five added cash. The release did not disclose how the remaining respondents repositioned, how much money they moved or which overseas markets they selected.
The shift adds to a longer-running reduction in the home bias traditionally shown by British investors. LSEG estimated in 2025 that more than £1.9 trillion had moved out of UK equities since 2000, leaving domestic investors with their lowest recorded allocation to UK-listed shares.
The Investment Association reported that UK All Companies funds suffered £418.8 million of net retail outflows in January 2026. UK investors then withdrew more than £300 million from UK equity funds in May as total equity fund redemptions reached approximately £1.5 billion.
The survey does not distinguish between investors who sold UK shares and those who retained existing holdings while directing new contributions abroad. Large UK-listed companies also derive a substantial share of their revenue outside the country. The FTSE 100 does not provide a pure measure of domestic economic confidence, while the more domestically exposed FTSE 250 is generally more sensitive to UK growth, interest rates and consumer conditions.
FTSE 100 Closed at 10,529.39 Despite Political Transition
The FTSE 100 closed at 10,529.39 on 14 July after gaining 0.3% during the session, remaining close to record territory despite the Labour leadership transition. Strong index performance can coexist with domestic fund outflows because foreign investors, currency movements and the overseas earnings of large constituents all influence London-listed shares.
Almost 78% of IG respondents expected political uncertainty to either damage the UK stock market or increase volatility. Beauchamp said investors had not necessarily abandoned risk or long-term growth opportunities but were waiting for greater visibility. "That doesn't necessarily mean investors are abandoning risk altogether. Many continue to look for long-term growth opportunities, but confidence in UK markets will depend on greater political and economic certainty over the months ahead."
Burnham's selection resolves the immediate question of who will succeed Starmer. Markets will now assess the incoming government's approach to taxation, public spending, infrastructure, business regulation and economic growth, alongside the composition of the new cabinet.
FAQ
What percentage of UK investors changed their portfolios due to political uncertainty?
23% of active UK retail investors changed their portfolio allocation because of domestic political uncertainty, according to IG's biannual Client Sentiment Study conducted between 9 and 23 June among approximately 1,800 active clients.
What was the top concern among UK investors in June 2026?
Geopolitical conflict and war became the largest concern, cited by 69% of investors, up from 51% in December. This surpassed UK political uncertainty, which was cited by 61% of respondents.
How did UK investors who made changes reallocate their portfolios?
Among the 23% who changed allocation, 42% shifted money from UK markets into international investments, while 19% increased their cash holdings, according to the IG survey.
