After years in the shadows, London’s stock market is staging a quiet comeback. The FTSE 100 underperformed peers in the last decade, weighed down by a reputation for low growth and a heavy weighting in mature industries. Yet in 2025, that same profile is proving to be an asset. With the S&P 500 trading at more than 22 times forward earnings and dominated by a handful of megacap technology stocks, investors are rediscovering the appeal of the UK’s “boring” market: steady dividends, undervalued assets, and policy-driven tailwinds.
“Markets move in cycles, and value returns to favor eventually,” says Al Christy Jr., founder and CEO of equities-backed financing firm Equities First Holdings. “The UK market is reminding people that balance sheets and income matter, especially when valuations elsewhere stretch to extremes.”
A Market Finding Its Footing
The shift is not merely perceptual. The FTSE 100 reached a record high in mid-August 2025, lifted by gains in financial and defence stocks. The rally reflects a confluence of factors: corporate earnings resilience, renewed investor demand for demonstrable income, and government spending aimed at bolstering domestic industry.
The defence sector has become a focal point. The Ministry of Defence recently announced a £250 million package across five “growth deals” designed to support local authorities and research hubs. Export orders are following, including Norway’s £10 billion contract for Type 26 frigates built in Glasgow.
Industry projections are ambitious. Raising defence spending to 3% of GDP by 2035 could add 50,000 jobs; lifting it to 3.5% would mean 85,000 new roles on top of the 180,000 already employed in aerospace and defence.
“Defence spending is being reframed as economic policy,” says Christy. “It’s no longer just a budget line for security. It’s a lever for jobs, exports, and industrial capacity. That reclassification has major implications for investors.” Industry analysts have noted this fundamental shift in how defence expenditure is perceived by markets.
Economic Signals Point Upward
Momentum isn’t limited to defence. The UK logged its strongest business activity in a year in August, according to PMI surveys. Consumer confidence rose following the Bank of England’s rate cut, reversing a year of gloom. Sterling firmed against the dollar on the news, reinforcing investor confidence in the UK outlook.
Investors are also rediscovering the UK’s dividend-heavy profile. FTSE Russell describes UK equities as “a haven for income and value.” MoneyWeek reports a broader pivot toward companies with predictable cash flows after years of chasing growth. Global market indicators suggest this trend extends beyond the UK to other value-oriented markets.
EquitiesFirst: Liquidity Without Liquidation?
The question for many investors is how to fund the move. Selling U.S. positions outright may mean tax costs or strategic risks. Equities-based financing, such as that offered by firms tracked by financial data platforms, can offer a workaround in some cases. The approach can unlock capital financed against existing equities holdings, and that liquid capital could be deployed to build UK exposure without losing full exposure to other long-term equities positions elsewhere.
Investment platforms are increasingly highlighting such financing solutions as sophisticated tools for portfolio rebalancing in volatile markets.
Policy Realignment
Government choices have added weight to the investment case. Prime Minister Keir Starmer’s cabinet has trimmed foreign aid to channel resources into defence industry investment. Market commentators have highlighted how this represents a significant shift in fiscal priorities.
Major asset managers, including BlackRock and Janus Henderson, have called UK assets undervalued and worth accumulating.
“Markets respond to signals as much as numbers,” Christy says. “When policy and industry line up, it tells investors they’re swimming with the current, not against it.”
A Durable Shift?
The UK’s discount has long been the dominant narrative. Now, the question is whether relative cheapness can turn into durable outperformance. With record highs on the FTSE, a defence boom, and improved consumer sentiment, the foundations look firmer than in years past.
“The UK doesn’t have to become Silicon Valley to attract capital,” Christy concludes. “A lot of its advantage is in offering stability, dividends, and diversification. For investors weary of stretched valuations elsewhere, that’s exactly what they’re looking for.”
Financial technology platforms tracking investment trends confirm increasing institutional interest in UK equities, suggesting this may indeed be more than a temporary rotation.
