Is it Safe to Invest in the UK in Sterling? Or is Milan in Euros a Better Bet? Diversification is Key

 

Is it Safe to Invest in the UK in Sterling? Or is Milan in Euros a Better Bet? Diversification is Key

Only in the Short Term… and with Caution

The United Kingdom has long been considered an attractive destination for foreign investment, thanks to its strong financial tradition and institutional stability. However, in recent years, this image has started to crack. The question many investors are now asking is: Is it still safe to invest in the UK, particularly in pounds sterling?

The answer, though not definitive, increasingly leans towards caution and short-term strategies. Why? Below I explain the key factors that have led to this uncertainty and why investing in sterling is no longer a safe long-term bet.

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1. Growing Political Instability

Since Brexit in 2016, the UK has experienced a political rollercoaster. Leaving the European Union stripped the country of the structural support provided by one of the world’s most powerful economic blocs. On top of this, frequent changes of prime minister, internal party divisions, political scandals, and a lack of long-term vision have added to the turmoil.

This has undermined international confidence and tarnished the image of stable governance that for decades attracted long-term investment.

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2. Post-Pandemic Economic Crisis and Structural Weaknesses

The UK was one of the countries hardest hit economically by the COVID-19 pandemic. As it emerged from the crisis, it was faced with persistent inflation, sluggish economic growth, pressure on the NHS, and high levels of public debt.

Moreover, the British economic model — heavily reliant on services, especially finance — has lost some of its shine in a world increasingly demanding energy sovereignty, industrial innovation, and resilient supply chains.

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3. The Pound Sterling: No Longer as Strong

Although sterling remains a globally recognised currency, it has shown notable weakness and volatility in recent years. As the UK loses global economic weight and endures internal crises, its currency has ceased to be the safe haven it once was.

Investing in assets denominated in pounds, especially with a horizon of more than three years, now involves significant currency risk — particularly for investors coming from more stable or dollarised economies.

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4. Short Term? Perhaps. Long Term? Better to Wait.

In this context, many financial analysts agree that UK investments only make sense in the short term — particularly if seeking to take advantage of tactical opportunities such as temporary discounts on real estate or financial assets. But in the medium and long term (more than three years), the outlook is far too uncertain.

If you are considering diversifying your portfolio with sterling-based instruments, do so with a clear strategy, professional advice, and well-defined exit targets.

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5. Recommended Video: In-Depth Analysis

I recommend watching this video, which explores in greater depth the current British context and its impact on the markets:
📺 Is the UK Still a Good Place to Invest?
A thought-provoking reflection on the UK’s new economic realities that you should not ignore.

 

6. The Wealthy Are Also Leaving the UK

A telling sign that confirms this long-term mistrust is that the UK is now among the countries losing the highest number of millionaires — second only to China. According to the 2024 report by Henley & Partners, around 3,200 high-net-worth individuals (HNWIs) left the UK in the past year alone.

Where are these fortunes going? To safer, more stable, and more tax-friendly destinations such as:

• The United Arab Emirates (especially Dubai)

• The United States

• Australia

• Italy (especially Milan, with its fixed-tax regime for wealthy individuals)

• Singapore and Switzerland

This exodus of human and financial capital is a clear warning sign: if those most experienced in managing wealth are leaving the UK, it’s because they no longer see it as a reliable place to grow their assets over the long term.

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Conclusion: Invest with Your Feet on the Ground

At Feliz y Saludable, we always promote a financial culture based on knowledge, analysis, and prudence. The situation in the UK reminds us that not even the most traditional markets are immune to global shifts.

By all means, invest — but do so wisely. The pound is no longer what it once was, and neither is the UK. Now more than ever, staying informed and up to date is the smartest investment.

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What do you think?

Are you considering investing in the UK or in sterling? Do you believe this trend can be reversed? I invite you to leave a comment or write to me to continue the conversation:
📱 WhatsApp +506 6110 8665 or +506 7171 0417 (Costa Rica)

Videos:

🎥 The Decline of Once Stable UK: A Nation on The Edge
https://youtu.be/1VoHp01P8w0?si=fJq0zEV-2fnZuGXo

🎥 How Does the UK’s New Tax Policy Affect Where the Ultra Wealthy Live?
https://youtu.be/OPADqRU3PPs?si=-9g46fMJ4Wtjs_PQ

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Feliz y Saludable – Tuesday, 10 June 2025
San José, Costa Rica
By Rafael A. Vilagut – rafaelvilagut@gmail.com