Concerns over the UK government's fiscal plans triggered an unprecedented sell-off in stock market investments in the months leading up to the Autumn Budget, new data reveals.
Record Outflows as Investors Seek Safety
According to figures from the global funds network Calastone, a staggering £6.7 billion was withdrawn from equity funds in the two months preceding Chancellor Rachel Reeves's fiscal statement on November 26, 2025. This marked the most severe and prolonged period of selling ever recorded.
The sell-down continued for a historic six consecutive months, with outflows of £3.63 billion in October followed by another £3.02 billion in November. In total, investors offloaded £10.39 billion of equity fund holdings between June and November.
Budget Day Brings a Sudden Halt to Selling
The data indicates that the wave of selling came to an abrupt stop on the very day the Budget was delivered. Equity fund outflows ceased on November 26, with inflows resuming on Budget day and over the final two trading days of the month.
Edward Glyn, Head of Global Markets at Calastone, stated: "The political narrative has played havoc with UK savers in recent months. Never have we seen such consistent or large-scale selling before." He pointed to the immediate post-Budget shift as clear evidence that investors had been pre-emptively selling due to fears of potential pension rule changes or capital gains tax increases.
Tax Fears and Tech Jitters Drive Aversion
The intense pre-Budget speculation was fuelled by economists' warnings that Chancellor Reeves needed to address a £50 billion shortfall in the public finances. While the Budget introduced measures like a three-year stamp duty holiday for new London listings to encourage investment, it also delivered a blow with an unexpected 2% increase in dividend tax for basic and higher rate taxpayers, effective next year.
The figures show UK-focused and North American equity funds bore the brunt of the outflows, losing £847 million and a record £812 million respectively. Alongside fiscal worries, appetite for equities was likely dampened by concerns that the artificial intelligence (AI) and US tech rally might be overheating.
This risk aversion was starkly illustrated by a flight to safety, with money-market funds seeing record inflows of £1.25 billion in November alone. Mr Glyn added: "It’s hard to disentangle Budget jitters from nerves about equity valuations, but the inflows to safe haven money-market funds do indicate rising risk aversion."
