Weekly Briefing: UK Aerospace R&D Investments, Britain’s Investor Confidence Soars, VC Funding Rises & Vanguard Economic Growth Forecast

This week's briefing offers up a varied array of headlines from the economic and investment spaces of late, with a strong focus on investment trends. 

Spanning aerospace technology, investor sentiment, venture capital funding, and economic forecasts, we’ve pulled together some of the most significant developments UK investors should be aware of from the past seven days. 

UK Investment

UK Investors Optimistic Ahead of General Election

• New research from the Investor Index 2024 shows 65% of UK investors believe a change in power will benefit their investments, rising to 85% among younger investors aged 18-44.
  
  
• The study, conducted by AML Group and The Nursery, reveals investor confidence levels are at their highest since 2020.
  
  
• 40% of investors have increased their investments in the past year, with 66% focusing on long-term opportunities and only 15% of investors seeking short-term opportunities, indicating a shift towards long-term financial investments.
  
  
• The new British ISA announced by Jeremy Hunt as part of the 2024 Spring Budget has been embraced by UK investors. 66% of all investors polled stated that they would use the new British ISA with that figure rising to 79% among the UK’s youngest investors (18-34).
  
  
• “Investors have retained the self-reliance they gained navigating the past few years” said Sarah Nunneley, Senior Strategist at the AML Group “With this confidence also emboldened by external market uplifts, creating not just a return in confidence, but a true revival.”

UK Venture Capital

UK Start-ups Secure Increased Venture Capital Funding

• UK start-ups raised $6.8 billion in VC funding in the first five months of 2024, a notable 1.6% year-on-year increase despite a 17.3% decline in deal volume.
  
  
• Aurojyoti Bose, lead analyst at GlobalData, stated that "the decline experienced in deal volume in the UK during January-May 2024 was in line with the global trend, wherein top markets such as the US and China also witnessed a fall in the number of deals.” 
  
  
• A total of 497 VC deals were recorded, with the largest deals including $1 billion secured by Wayve and Abound, and $431 million raised by Monzo along with many other 100m+ deals.
  
  
• During this period the UK accounted for 7.2% of global venture capital deals.
  
  
• Bose highlights that "the UK stands as the top European market for VC funding activity and was also among the top five markets globally both in terms of VC deals volume and value during January-May 2024."
  
  
• This increase in funding undoubtedly echoes the UK’s long-proven ability to provide an environment that nurtures and grows successful start-ups.
  
  

UK Technology

UK Aerospace Sector Showcases Innovation Following Record Investment

• The Farnborough Air Show has spotlighted the UK’s aerospace R&D capabilities, highlighting the sector's technological advancements over the last year, following record private investment.
  
  
• The Aerospace Technology Institute (ATI) describes the UK’s R&D funding system as unparalleled globally, asserting there is “nothing quite like the ATI or the UK system.” Despite this, more support is needed for scaling and commercialising disruptive technologies.
  
  
• Industry minister Alan Mak calls the UK aerospace sector a “British success story,” crediting the combined efforts of government and industry.
  
  
• Over a decade, the ATI has allocated £3.6 billion in aerospace R&D funding, attracting £7 of private investment for every £1 of public funding.
  
  
• The UK's 7:1 private-to-public investment ratio stands out as being particularly strong compared to the broader European context, highlighting the effectiveness of the Aerospace Technology Institute (ATI) in leveraging public funds to attract significant private-sector investment.
  
  
• Sophie Lane of ATI emphasises the need for ongoing investment to maintain global competitiveness, projecting that the UK industry could capture nearly 18% of the global aerospace market by 2050.
  
  
• Amid an increasingly diversifying investment market, the aerospace industry is one of many emerging tech sectors UK investors have increasingly looked toward in recent years.

UK Economy

UK Economy Poised for Growth Regardless of Election Outcome

• Joe Davis, Vanguard’s chief economist, predicts that the UK economy will grow by nearly 1% in the current quarter as the cost of living crisis eases, driven by increased disposable income and easing inflationary pressures.
  
  
• Davis expects a gradual decrease in interest rates from the Bank of England, approximately one cut per quarter, further boosting growth.
  
  
• Vanguard’s research suggests AI could significantly impact the economy, as it is predicted to enhance sectors such as medical research and education, with a 50% chance of being "transformational" for economic growth.
  
  
• “The past is behind us, and the same with the stagnation for last year,” said Joe Davis, emphasising optimism for the UK’s economic future.
  
  
• Regardless of election outcomes, Davis argues the UK should surge into economic prosperity next year, as political effects on the economy are typically long-term.
  
  

Final Note

In this week's briefing, having focused on positive UK headlines, it has been encouraging to see more indicators that the UK investing and economic landscape remains on an optimistic trajectory. 

With some forecasts predicting economic growth regardless of election outcomes, as positive investor sentiment is reflected with increased start-up funding, such encouraging signs continue to appear around the UK investment landscape in 2024.